Creative Risk Management and Oversight

The board’s risk oversight responsibility has been subject to enhanced scrutiny from the courts in recent years. Institutional investors have identified risk oversight as a critical governance issue while pushing for more meaningful disclosures on the board’s risk oversight activities. Although the day-to-day risk management belongs with management, the board must engage proactively in monitoring key corporate risk factors and working with executives on a strategy to mitigate risks. How can directors work most effectively with management to understand the company’s risk appetite, the nature of material risks, their potential impact on corporate strategy and performance, and how they are being managed? How can a director determine if the
company’s culture is “right”? What kinds of compliance structures are effective in preventing improper behavior, or—if necessary—detecting it promptly? How can boards communicate that they are handling the risk oversight function effectively? This session will examine how the board can most effectively carry out this oversight function in a world of increasingly complex and interconnected risks.