Enterprise Risk Management

The atmosphere in today's boardrooms is certainly not the "country club" setting that the old stereotype once suggested, and indeed, for many boards it never has been. However, the public scrutiny from shareholders, the government, and the media today is severe, to say the least. "Enterprise Risk Management" (ERM) and the position of "Chief Risk Officer" are just two examples of this emerging field in corporate governance.

Choosing to manage risks and actually doing it in an effective and meaningful way are two very different things. Anyone can create a Risk Assessment Committee of the Board, but how they translate their good intentions into actionable and quantifiable results is where much of the initial momentum is lost. An ERM plan is only as good as the behaviors it enforces. A plan with no real incentives (either positive or negative) for compliance will result in behaviors that either superficially go through the motions to give the impression of compliance, or ignore the plan altogether.

What do you think about Enterprise Risk Management? Is it another passing fad in response to the now transparent risky behaviors of banks dabbling in mortgage-backed securities? Or is this a process that will continue to gain traction in corporate America?

At Compensation Resources, Inc. (CRI), our professional consultants can provide Board Members with a customized approach to compensation that motivates the executive team to achieve the desired results and behaviors of the organization. We have years of experience in the design and development of compensation programs across a wide range of industries for both public and private companies. Please do not hesitate to call us at 201-934-0505 with any questions you may have.