The recession is leading risk managers to seek ways to use their budgets more efficiently, according to a survey released Tuesday.

“Excellence in Risk Management VI,” co-sponsored by New York-based Marsh Inc. and the Risk & Insurance Management Society Inc., also concludes that adoption of enterprise risk management appears likely to plateau at about 65% of firms, as senior executives press risk managers about ERM’s value.

The survey found loss control was the most commonly cited area firms looked at in their efforts to increase the efficiency of their risk management spending. In addition to 39% of respondents that cited loss control, 37% said they were marketing parts of their insurance program, including parts that normally are not marketed. Others cited replacing an insurer based on perception of financial condition, undertaking risk retention or risk-transfer optimization review, and increasing coverage limits.

Only 53% of respondents said the recession directly affected their firms’ risk management investment. Of those, only 7% said risk management spending would be “much lower;” 3% said it would be “much higher.”

The survey divided risk management approaches into three categories: traditional, progressive and strategic. It said it used the word “strategic” rather than ERM, saying “strategic has a broader connotation than ERM itself, which can be construed as a tool or set of activities associated with being strategic…‘ERM’ can sound like a process that a firm will need to spend money on, showing how risk management needs to be woven into the strategic goals of the company may allow the discussion with senior management to take place against a different backdrop.”

The survey found “most self-identified strategic companies are well beyond the planning stage for ERM, while more than half of traditional companies and one-third of progressive companies say that ERM is not in their plans.”

The survey noted that from 2006 to 2009, the percentage of companies planning to implement ERM dropped from about half to only 15%, but that coincided with a “dramatic increase” in the number of companies that partially implemented ERM. “What did not occur, however, was a significant rise in the number of firms reporting full implementation of their ERM plans,” according to the survey.

The increase in companies saying they have no plans to adopt ERM “is evidence that tough questions about its cost and value are being raised. Senior executives want to know exactly how ERM adds value. Proponents say ERM’s value to a firm comes in many areas that are not easily quantifiable, making it important for risk managers to effectively point out the quantitative benefits,” according to the survey.

To think and act more strategically and effectively about risk management, the survey’s recommendations include evaluating the company’s position in the economy; establishing an evaluation process to assess the firm’s risk management approach, and devising a way of establishing return on investment for the risk management function.

Copyright © 2009 Crain Communications, Inc.