ERM for Healthcare: 5 Questions to Ask at Your Next Board Meeting

August 13, 2018

The answers may help frame your approach to investment management

As risks have evolved, so has the landscape for healthcare providers. As a result, some boards are taking a fresh approach to investment management decisions. Given the realities of limited time, resources and expertise, some boards are advocating for an integrated, coordinated approach to enterprise risk management. Are you considering a similar tactic when it comes to investment management?

How does your investment approach stack up?

Your financial goals should align with the overall goals of your organization. A holistic approach focuses on returns in the context of overall organizational risk tolerances and broader financial goals and objectives.

Is your healthcare organization viewing investment management through that lens? Should you be? 

Here are 5 questions to ask at your next board meeting:

  1. Has our board governance determined the organizational risk tolerance and if so, how often do we reevaluate it?
  2. Do we have a clear understanding of the range of financial and capital market risks our organization may be exposed to? 
  3. Is our asset allocation decision-making focused on total return or based on how the allocation strategy supports/impacts financial and strategic objectives?
  4. How often has our organization changed its strategic asset allocation and what were the key decision points driving the change?
  5. Do we spend more meeting time evaluating/monitoring individual manager performance or discussing strategic allocation and its role in broader strategic goals and objectives?

Next steps

How easy/difficult was it to answer these questions? If it was difficult, that might be a sign that you could use an outside resource to:

  • Provide scenario analyses to better understand how your portfolio may react to market swings
  • Audit your processes to ensure they're bringing the best impact on the overall organization
  • Help align your balance sheet with risk management to better support growth

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Legal Note

Information provided by SEI Investments Management Corporation (SIMC), a registered investment adviser and wholly owned subsidiary of SEI Investments Company.