for Boards

Board & Director Risk

Risk is the hot topic in boardrooms today. A survey completed by Corporate Board Member and PricewaterhouseCoopers reported that in 2008 59% of directors reported that "unknown risks" keep them up at night.

Overview:

In April 2009, U.S. Securities and Exchange Commission (SEC) Chairman Mary Schapiro, speaking before the Council of Institutional Investors indicated "potential new regulations may be emerging for greater disclosures about risk oversight practices of public companies." In addition to such a statement from the SEC, the topic of risk oversight has also been discussed and addressed by the National Association of Corporate Directors, the AICPA, and from COSO.

Three common tenets that each director should be aware:

• Risk is present in every phase/part of your business, it crosses all organizational lines, including the board of directors.
• The successful companies are able to effectively manage and mitigate their risks.
• In their oversight role, the board of directors must have an understanding of the process for identifying, assessing, managing and mitigating significant risks within their organization

In the midst of today's business environment, where risk and its management are usually discussed in relation to the problems, failures, crises and excessive executive compensation, XCEO has developed two products to assist directors in understanding their individual risks and provide concise and understandable guidance in establishing effective oversight of management's risk management processes. These products can be used as stand alone or complimentary with our other unique and effective board evaluation tools. It is suggested that each board obtain both products in order to provide for both adequate evaluations of their risk oversight process and for each directors’ own individual risk assessment based on his or her service on the board.

Boards have the opportunity to partner with XCEO in identifying and mitigating risk.

Boards are asking themselves, and being asked, if they could do or have done a better job in overseeing the management of their organization's risk exposures, and improve board oversight to prevent or minimize the impact of a financial or other crisis in their organization.

What can boards do to mitigate risk?

Until now, the assessment tools that were available to boards were generally limited to the reporting of assessment time, date, and status. These perfunctory methods which often include, limited and cursory consulting services only, fail to help boards and directors improve and become comfortable and sustain their comfort with the risk oversight process by asking the right questions, collecting and assessing data.

Unlike simple checklists and general templates, which simply do not deliver the how's, what's and why's that result in improved oversight and risk mitigation for boards and directors, our products and in-depth consulting services are an effective and comprehensive approach to these issues.

With expectations for increased board engagement on risk at an all-time high, and with management of risk being a strategic objective and indicator of performance, how does your board's performance measure up? How does its performance aid in mitigating the company's risks along with the board's risks and your personal, financial and reputational risks? What steps has it taken to assess and assure effective performance? If you do not have confidence in your responses, then your board, and you individually, may be at risk.

The XCEO Solution:

Addressing risk oversight properly requires special understandings. As a director concerned about the growing demand for increased board risk oversight, Dr. Curtis J. Crawford along with Neil Jackson and John Moore, risk experts, specifically designed "director focused risk oversight evaluation assessment processes and tools" with supportive documentation to help boards understand, assess oversight performance and set in place processes for sustainable improvement and readiness in light of increased scrutiny.

To learn more about the Individual Director Risk® (IDR) and Risk Oversight Evaluation® (ROE) for the board, please visit our Risk Consulting & Products page.

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