Under the new directive from S&P, companies seeking a positive credit rating will be required to provide evidence of a formal and effective risk management program. S&P considers this a good indicator of forward-looking stability.
“S&P’s decision to apply ERM analysis to its corporate ratings further thrusts risk management into the spotlight and ultimately is a good thing for companies and investors alike,” says Narina Sippy, senior vice president of SAP’s governance, risk, and compliance business unit. “With dramatic corporate events continuing to make headlines around the world – from numerous product recalls to the mortgage crisis – one thing is clear: Companies are fundamentally rethinking their focus on risk management.”
SAP and its partners have developed industry-specific risk catalogs containing key risk indicators (KRIs). The SAP GRC Risk Management application continuously monitors these KRIs so that management is immediately notified of changes in risk levels.