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Strategy

Board Risk Oversight and ERM: What Executives Should Know


by FEI Daily Staff

Highlights from the April 7,2016 Board Risk Oversight and Enterprise Risk Management (ERM) conference.

©Olivier Le Moal/ISTOCK/THINKSTOCK

On April 7, 2016, St. John’s University, Tobin School of Business, Center for Excellence in Enterprise Risk Management (ERM) hosted a conference on Board Risk Oversight and ERM. Attendees were treated to four excellent presentations by a host of subject matter experts from academia, consulting, and industry on topics related to Recent Board Risk Oversight Debacles; Board Expectations for ERM; Boards Linking ERM to Strategy & Innovation; and Helping Boards Create Value through Risk Oversight.

Dr. Paul Walker, Schiro/ Zurich Chair in ERM at St. John's University; Executive Director, Center for Excellence in ERM and Steven Minsky, Chief Executive Officer, Logic Manager, briefly highlighted recent Board risk oversight “debacles” including Target, General Motors, Pennsylvania State University, Dwolla, BP, Chipotle, and Volkswagen. A common theme throughout these cases was a preventable systematic failure in risk management. Additionally, risks often precede laws, regulations, and industry practices. But ERM need not be an innovation killer. Companies should assess their risk and control environments associated with new innovations.

Henry Ristuccia, Partner, Governance, Regulatory, and Risk Strategies and Dmitriy Borovik, Energy and Resources ERM Services Leader, both with Deloitte, focused on Board Expectations for ERM and Board Risk Oversight. Boards need to ensure risk programs are directly tied to “value-killer” or critical strategic risks. They are also responsible for creating risk governance “tone at the top” by promoting a risk intelligence culture throughout the organization by providing oversight and continuously monitoring the overall risk management processes, practices, and trends.

Deon Minnaar, Global Lead of ERM/GRC, KPMG and Chris Mango, VP of ERM, ADP presented How Boards Want ERM Tied to Strategy & Innovation. Businesses face several types of risk including strategic, operational, and external. Change is happening at a rapid pace. Political, economic, social, and technological changes could all impact business. Boards must interpret these signals, filter out the noise, and focus on the most probable and impactful. ADP highlighted how evolving workforce dynamics are requiring new approaches to human capital management. Becoming a strategic enabler allows ERM to respond to marketplace signals of change.

Dennis Chesley, Global Risk Consulting leader, PWC discussed Helping Boards Create Value through Risk Oversight. According to PwC’s CEO Survey, CEOs see more threats today than three years ago, but also more opportunities as they navigate a more complex world. Emerging risks are impacting organizational strategy more than ever and changing the conversation in boardrooms. Insightful information is indispensable for Boards to be proactive in managing risk and continue strengthening their reputation, brand and trust. Changing the conversation in the Boardroom can help you build Enterprise Resilience.

The reality is we live in a “gotcha” world and the age of continual monitoring is upon us. Boards must ensure ERM works across silos and that risks are directly connected to controls.