ERM News
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NACD Releases Report on Risk
November 12, 2009
A Blue Ribbon Commission convened by the National Association of Corporate Directors (NACD) released a report on strengthening corporate boardroom activities. Specifically, the report details solutions and practical advice for directors on risk oversight. A year after the financial collapse, the report is a "how-to" for directors who are recommitting to corporate governance excellence.
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COSO Supports Integration of Strategy and Enterprise Risk Management
November 04, 2009
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) has released a new thought paper, Strengthening Enterprise Risk Management for Strategic Advantage, that highlights specific areas where senior management can work with its board of directors to enhance the board’s risk oversight capabilities and the organization’s strategic value. This document builds upon responsibilities outlined in a recently released COSO thought paper, Effective Enterprise Risk Oversight: The Role of the Board of Directors, to provide more detail on ways senior management can work with the board and others in the organization to strengthen risk management in all types of organizations.
Link: COSO Supports Integration of Strategy and Enterprise Risk Management
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SEC Establishes Division of Risk, Strategy, and Financial Innovation
September 24, 2009
The Securities and Exchange Commission recently announced the formation of a newly-established Division of Risk, Strategy, and Financial Innovation. This new division will provide the Commission with sophisticated analysis that integrates economic, financial, and legal disciplines.
Link: SEC Establishes Division of Risk, Strategy, and Financial Innovation
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Importance of Supplier Risk Management Increases
September 09, 2009
Recent survey findings indicate growing concerns about global supply chain management risks. Concentrations of spending by Fortune 500 companies on a similar set of suppliers suggest that supplier failures could have a systemic effect across a broad spectrum of companies.
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The Need to Demystify Risk Management
September 09, 2009
Some believe that the culture for risk management needs to change, including the need to demystify risk management. While risk management is back in vogue, organizations are finding benefit in keeping the process simple, such as beginning with the basics of showing people at all levels of an organization how to make decisions in a more disciplined way that takes into account a fundamental understanding of core risk factors.
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New ISO Risk Management Standard Approved for Issuance
September 09, 2009
The International Organization for Standardization (ISO) has approved the final issuance of its first international standard on risk management, scheduled for release in October. The new standard, ISO 31000:2009, draws heavily from the Australian/New Zealand risk standard AS/NZS 4360.
Link: New ISO Risk Management Standard Approved for Issuance
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COSO Releases Thought Paper on Board Risk Oversight
August 24, 2009
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) has released a new thought paper, Effective Enterprise Risk Oversight: The Role of the Board of Directors. The document is aimed at helping boards of directors strengthen their oversight of enterprise risks.
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Boards Reassessing Risk Intelligence
August 07, 2009
In response to apparent failures to adequately monitor risk, many boards are reassessing their risk oversight duties and capabilities. Boards can improve their risk oversight process by adding new directors with risk management backgrounds and all boards can benefit from ensuring that risk discussions are regular board meeting agenda items.
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GovernanceMetrics International Introduces New Findings on Enterprise Risk Management
August 07, 2009
GovernanceMetrics International (GMI) recently announced new findings concerning ERM and risk oversight at the board level. One significant finding is that only one-third of the over 4,000 companies covered by GMI provide disclosure on their ERM policies in the annual report or other publicly available sources.
Link: GovernanceMetrics International Introduces New Findings on Enterprise Risk Management
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S&P Issues Progress Report on ERM Integration into Credit Ratings
August 07, 2009
S&P recently published a report detailing the focus of their discussions with rated companies regarding ERM and insights gleaned from these discussions to date. So far, ERM discussions have been conducted with over 300 rated issuers and the report shares the seven questions used as the basis for these discussions. An interesting preliminary finding is that few companies have leveraged their ERM programs to identify risky opportunities that they are well-positioned to capitalize upon--most companies are focused exclusively on identifying and managing downside risks.
Link: S&P Issues Progress Report on ERM Integration into Credit Ratings
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Need to Apply ERM Infrastructure on an Enterprise-Wide Level
July 30, 2009
ERM technology, while designed to be an enterprise-wide solution, is often limited to certain areas of the business or particular aspects of the risk profile. A challenge for companies is to implement ERM technology that truly incorporates an enterprise view of risk, including scenario analysis that projects possible future economic environments. Companies should also keep in mind that despite the effectiveness of an ERM infrastructure, it is up to management to make decisions and ensure risk management systems are used properly.
Link: Need to Apply ERM Infrastructure on an Enterprise-Wide Level
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The Role of Human Resource Management in Risk Management
July 30, 2009
A recent article by Bernard Erven of Ohio State University examines the roles of human resources in risk management primarily from a farm and small business perspective that is applicable to many other businesses. In business, people are both a source of risk and instrumental in handling risk and an understanding of the human resource management process and skills important to human resource managers can help businesses effectively integrate human resource management and risk management.
Link: The Role of Human Resource Management in Risk Management
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Can Congress Cure Corporate Governance?
July 30, 2009
A recent article in the National Law Journal discusses the merits and potential problems related to the proposed Shareholder Bill of Rights Act of 2009 currently before Congress. The Bill would require U.S. public companies to have annual shareholder votes on executive compensation, granting shareholders the right to include their director nominees in management’s proxy materials, and mandating the creation of a risk committee of the board of directors.
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SEC Proposes New Proxy Disclosures on Board’s Risk Oversight
July 30, 2009
The Securities and Exchange Commission released on July 10, 2009 proposed new rules that would require public companies to expand their proxy disclosures to include information about the impact of their overall compensation policies on risk taking and the board’s role in the risk management process. Comments on the proposed rule are due to the SEC September 15, 2009.
Link: SEC Proposes New Proxy Disclosures on Board’s Risk Oversight
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KRIs and KPIs Are Important for Effective Risk Management
July 20, 2009
Key risk indicators (KRIs) and key performance indicators (KPIs) are leading indicators that can be used to measure the level of risk in an organization. KRIs are often leading indicators of KPIs, which can be leading indicators of financial performance, increasing the importance of understanding their relationships for effective risk management.
Link: KRIs and KPIs Are Important for Effective Risk Management
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Addressing Systemic Risk
July 20, 2009
A June 2009 speech by Alan Greenspan contends that systemic risk is an unavoidable characteristic of market economies. Greenspan states that systemic risk in the U.S. is primarily a financial institution risk because of the potential for pervasive impact on the broader economy. He also discusses the “too big to fail” problem and regulatory challenges that this brings.
Link: Addressing Systemic Risk
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Finding Value in ERM
July 01, 2009
A recent thought paper by Grant Thornton highlights how companies can find value in ERM. ERM can lead to improved credit ratings, better evaluation of risks in an economic downturn, stronger governance and corporate compliance, and enhanced identification of strategic opportunities.
Link: Finding Value in ERM