Risk Management Watch: Risk Recruiting Top Priority in Board Rooms
The global financial crisis is dramatically reshaping the financial services industry in the U.S. and around the world. Today, firms are struggling to adjust to the unfolding global economic environment. Corporate boards are facing unparalleled levels of business complexity, a constantly changing political landscape, new regulations and mounting shareholder demands. Realizing the challenges that lie ahead, business leaders are gravitating towards enterprise risk management (ERM) in assessing a firm’s strategic objectives and risk management. In fact, directors are increasingly focused on enterprise risk management, according to PricewaterhouseCoopers/Corporate Board Member 2008 Survey. Results of the survey also show that strategy, succession planning and recruitment remain top priorities in the board room.
Executive recruiting firm, A.E. Feldman, says understanding and managing enterprise-wide risk has become a top priority. The firm reports that risk management jobs are evolving to better manage initiatives to ensure that business objectives are met, losses are minimized, business processes are improved and greater accountability is achieved. A.E. Feldman also notes that financial and risk professionals with expertise in processes for assessing credit and counterparty risk and liquidity risk are in demand along with professionals with experience in restructuring and litigation support that can provide advice on how to respond to the evolving market conditions and subsequent regulatory changes.
Risk Top Priority in Board Rooms
According to business model advisors, SAS, “Enterprise risk management entails more than balancing risk and reward, and goes beyond regulatory compliance. It embeds risk management into everyday processes at all levels of the organization in order to truly drive business evolution.”
The PwC survey, which polled over 1,000 directors of publicly traded companies, clearly shows that boards are recognizing the need to understand the real risks facing their companies in order to protect shareholder interest. When asked if they felt their board members could adequately meet the responsibility of monitoring the company’s multitude of risks, 81% of directors felt their board was capable. In contrast however, just 50% said their board was effective or very effective at monitoring a risk management plan to mitigate corporate exposures.
“In light of the economic uncertainty we face today, boards should ensure they are aware of the risks their companies encounter on a daily basis and make certain that appropriate risk management practices are in place,” said Catherine Bromilow, a Partner with the Corporate Governance Practice at PricewaterhouseCoopers.
The PwC survey also reveals that strategic planning is another company-wide concern that is closely tied to risk management. More than half, 66%, of directors polled say they want to spend more time on strategic planning compared to 58% in 2007. Moreover 47% of respondents say their board isn’t as effective as it could be at management succession planning, and 41% of respondents said the board should devote more time to discuss succession planning.
Just over half of directors, 53%, believe there is a shortage of qualified directors for today’s companies. According to the survey, 37% of directors polled also report their boards have reservations about bringing in a new director with no previous board experience. “Given this degree of concern, one wonders how boards will be able to expand their diversity and add new, needed skill sets, and how do otherwise qualified people get a chance to be a director if this barrier exists,” notes Bromilow.
As the financial crisis continues to unfold, A.E. Feldman is on top of global trends in finance and risk management. The recruiting firm invites both corporations and job seekers to contact its President, Mitch Feldman and its highly specialized team of executive recruiters directly to talk about the array of issues they are facing and what solutions are available.
