Risk Intelligent™ governance
Lessons from state-of-the-art board practices
Events of the past decade—including the collapses of high-profile companies, economic volatility, and growing regulations and guidelines—have placed boards under greater scrutiny from regulators, shareholders, the media ,and analysts. Such scrutiny has led to rising expectations for improved governance and risk management. To help boards meet these rising expectations, we offer a closer look at state-of-the-art board practices.
Helping boards become Risk Intelligent™
What can the board do to manage growing expectations, be better aligned with business and marketplace trends, and help the organization achieve its goals? What is the board’s role in helping to set the tone and in overseeing a risk management program that embeds appropriate risk management procedures—encompassing both value protection and value creation—into all of the organization’s business pursuits? And how can directors work toward treating risk management not as a separate or standalone issue, but as an integral component of everything the board considers?
In short, how can the board become Risk Intelligent™?
Actions boards can take
Based on our work with boards in their risk governance efforts, we offer six distinct actions that can help enable a Risk Intelligent governance approach:
- Define the board’s risk oversight role
- Foster a Risk Intelligent culture
- Understand and approve an appropriate risk appetite
- Help management incorporate Risk Intelligence into strategy
- Assess the “maturity” of the risk governance process
- Make sure the organization discloses the risk story to stakeholders
As risk is intrinsic to the conduct of business, it is an essential consideration in every decision and activity. It is up to each board to decide what lessons it can glean and apply from these action items—and from the state-of-the-art case studies provided—in the execution of its responsibilities.