Measuring risk's scope a tough job; Without standards, approaches vary.(Spotlight: Enterprise Risk Management)

Byline: JUDY GREENWALD

One of the most critical tasks in enterprise risk management is measuring risk, yet it can also be one of the most daunting.

Risk measurement is ``absolutely para-mount right now, and, going forward, I think it'll become even more important that measurement, and the tools available to measure risk, continue to develop to help corporations and insurance carriers'' meet or surpass their objectives, said Bruce Zaccanti, Chicago-based national practice director for Ernst & Young L.L.P.'s insurance advisory and risk consulting services group.

In undertaking such a task, the risk manager must not only narrow down the list of risks to be measured but also decide how they should be gauged.

Depending on the type of risk involved, that task can be very simple or very complex. Determining, for example, the impact of various interest rate drops on a bond portfolio is significantly less complex than is evaluating the impact of a rival company's introduction of a competing product.

Complicating the issue further is that there is no one established standard for measuring risk, say observers.

Some believe such a standard is needed. Peter Teuton, president of Baltimore-based SAFE Risk Management Systems L.L.C., a risk management services provider, said, ``There is no common standard in the …