Fund Directions - A Proactive Approach To Risk Intelligent Governance

A Proactive Approach To Risk Intelligent Governance

Cary StierBy Cary Stier*

Management is constantly preparing for board meetings at both the corporate and investment product level. The directors from each of those boards have historically stuck to their knitting and not crossed over into each other's world. With increased focus on how best to define the board's risk oversight role, each of the boards have increased communications with senior officers, as well as between the boards, providing each board a more holistic view and greater insight into where the risks lie.

A proactive approach to risk management offers directors a framework to integrate their responsibilities with those of management. The following are six steps directors may want to consider taking towards enacting a risk intelligent governance program.

1. Define the board's risk oversight role. The board is accountable for overseeing risk management and should be involved in the risk oversight process. Depending on the organization's needs and the board's structure and composition, however, it may make sense to allocate specific aspects of risk oversight responsibility to specific board committees. Like any organizational process, risk management requires a framework that defines goals, roles, activities and desired results.

Questions to consider asking:

* Are we getting the information and insights we need for key decisions?

* What mechanisms does management use to monitor emerging risks and how often are they calibrated?

* What is the role of technology in the risk management program and how was it chosen and last evaluated?

2. Foster a risk intelligent culture. In a risk intelligent culture, ...

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A Proactive Approach To Risk Intelligent Governance