Standard & Poors could start scoring non-financial companies on enterprise risk management next year to provide a more forward-looking enhancement to its credit ratings, according to a statement from S&P.
We will begin to incorporate ERM into discussions with rated companies in the third quarter and begin to include commentary in our reports in the fourth quarter, Steven Dreyer, managing director of corporate ratings, said in the statement. Ultimately, we will enhance transparency by providing investors and issuers our views of a management teams ability to understand, articulate and successfully manage risk.
But Standard & Poors will defer formal scoring of companies ERM capabilities until we have conducted a sufficient number of reviews to permit reliable benchmarking and published evaluation criteria, which is unlikely to occur before 2009, the statement said.
The benefits of the ERM enhancement will be to make the process of forming our rating opinions more forward looking, achieve finer differentiation among ratings, and facilitate construction of what-if forecast scenarios, Mr. Dreyer said in the statement.