Appropriate risk-taking is a key element in the operation of a successful company. The board of directors of a company is charged with overseeing the management of the company, which includes oversight of the company’s risk management, as well as the process of evaluating risk. How a board approaches this responsibility is open to interpretation and depends in part upon the unique facts and circumstances applicable to each company. Given the importance of risk management to a company’s operations, as well as the increasing liability and public relations ramifications related to risk-management failures, this article will evaluate different types of risks that a company faces, and the board’s responsibility in connection with the oversight of these risks.
Protiviti and North Carolina State University’s ERM Initiative published a report, “Executive Perspectives on Top Risks for 2015,” focusing on key issues that are being discussed in the boardroom and C-suite. The report analyzes insights from 277 board members and executives responding to the survey regarding risks that are likely to affect their companies over the next 12 months. On the basis of their responses, the report divides the risks into three categories:
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