cfo.com

cfo tagline

Who Owns Risk?

First came chief accounting officers, now chief risk officers are making their mark.

Sarah Johnson, CFO.com | US
June 29, 2011

The " Real Point is.....

While it is encouraging to note that more companies are paying attention to the Risk Management in a structured way, the "Real Point" that most seems to be missing are that Risk Management is "truly" the responsibility of the CEO? The way these surveys are conducted and the way findings are reported makes it look that the Risk Management is a separate and a distinct function in companies. While the truth is that it should be part of the "day-to-day" job of everyone in the organization starting from top to bottom. All decisions about "adding value" must be balanced with a clear understanding of how they change the "retained risk" profile of the company and whether the new "risk profile" is acceptable given the projected return from the "decision".

Posted by Parveen Gupta | June 30, 2011 12:45 pm

a CRO can provide the most independent view of the actual risks in a company

As an internal auditor for over 30 years, I can attest as to the need for this shift in elevation of status for risk officers. The CFO?s in the recent past have been so pressured to explain the financial status of their companies in the most euphemistic and political correct terms at his disposal. Terms that include spins on the facts that are envied by the best of public relations spin-doctors. This would not be all bad, if at least they would not lie to themselves and begin to believe their own tall tales, unfortunately this has not been the case. Some clear thinking independent individual in the organization has to be the? little boy? in the crowd that has the power to yell out ?But the king has no clothes!? without fear of reprisal. Without the power to speak ones mind there can be no true risk management, a CRO reporting to the CEO or better yet to the board can be that little boy. Companies must face unpleasant news about their risk weakness head on, without equivocation, sure it can be discussed behind closed doors, in fact a morbidity inquest , much like its performed at hospitals by doctors is a good model for unearthing errors and then correcting them. The problem has been that no one has been sufficiently independent and powerful to face the CFO and discuss these issues even behind closed doors, as the fear of reprisal in the past has hampered open discussion and transparency.

Posted by Eduardo Casas | June 30, 2011 11:21 am

CFO Publishing Corporation 2009. All rights reserved.