Board Should Ask About Risk Management

9Questions Every Board Should Ask About Risk Management Boards play a critical role overseeing an effective risk management process that permeates an organization, minimizing liabilities and maximizing opportunities. Board oversight is key to ensuring that management is accountable for risks facing the organization and is designing a strategy that aligns the appropriate degrees of acceptable risk with organizational goals and objectives. Risk conversations, as a dedicated part of every board meeting agenda, should consider the following questions: Risk Environment 1 2 3 What is the organization's appetite for risk in the pursuit of building shareholder value? Are risk governance and management responsibilities clearly defined at all levels of the organization? Is there a process in place for identifying and collecting information about new or changing risks? Risk Assessment + 0- O** Residual Risk Is it acceptable? Likelihood Impact Effectiveness of the risk event of the risk if it occurs of internal controls occurring (financial and nonfinancial) 4 5 t:6 Are risk identification and Do existing controls and processes adequately mitigate Has a risk assessment framework been customized assessment linked to the to consider risk characteristics business strategy? identified risks? that are most critical across the organization? Risk Monitoring 8. Are all identified risk metrics properly aligned with strategy objectives to serve as indicators of potential problems? Is risk management embedded in planning, communications, and training activities across all functions? Is the dlalogue and reporting of risk throughout all organization levels, including the boardroom, open and ongoing? For more information, contact: Gerard Zack, BDO Global Forensics Practice, Managing Director, 202-644-5404 / gzackebdo.com Amy Rojik, BDO Center for Governance, Partner, 617-239-7005 / [email protected] BDO USA, LLP, a Delaware imited liability partnership, is the US. mamberof BDO Intemational Limitad, a UKcompany limitad by guarantes, and forms partof the intamational BDO notwork of independent member firms. BDO is the brand name for the BDO natwork and for each of the EDO Mamber Firms. For mora information please visit: www.bdo.com. |BDO Matarial disaussed is meant to provida ganaral information and should notbe acted on withoutprofessional advice tailored to your firm's individual needs. O 2016 BDO USA, LLR A rights reserved