S&P’s ERM assessment model too rigid, says RIMS

The Risk and Insurance Management Society (RIMS) has expressed concern about how to apply Standard & Poor’s (S&P’s) proposal to implement an enterprise risk management (ERM) analysis for credit ratings of non-financial companies.
Overall, RIMS commends S&P’s work to elevate the visibility of ERM in businesses and supports S&P’s adoption of an ERM framework as a component of its ratings reviews, a RIMS release says.
But RIMS also offered suggestions for how to improve the structural requirements outlined in S&P’s assessment framework.
“RIMS encourages S&P’s to consider whether its framework and evaluation process is flexible enough to fit any given company’s culture and management style, particularly with S&P’s apparent focus on applying a sector-specific platform,” the RIMS release says.
“RIMS asks that S&P’s consider carefully the different operating perspectives of financial institutions and non-financial companies and take these differences into account as it transitions the assessments of non-financial companies.”
The society suggested the rating agency consider a continuum of ERM maturity in assigning its ratings, and offered its Risk Maturity Model as a tool for consideration.