engleski

The Role of the Board in Enterprise Risk Management

Over the last decade the overall pace of change in the modern society and the growing complexity of business transactions have increased the volume of risks organizations face worldwide. One of the most important challenges in raising competitiveness and creating a new, better society for the 21st century is the advocacy and development of good corporate governance practices at the global level. The development and refinement of corporate governance standards has often followed the occurrence of corporate governance failures that have highlighted areas of particular concern, and the 2008 financial crisis has shown us that boards have a difficult task in overseeing the management of increasingly complex and interconnected risks that have the potential to devastate not only organizations but the overall economic system overnight. Thus, the aim of this chapter was to provide insights and possible answers to the question what is the appropriate role of the board in corporate risk management. In trying to do so, we presented COSO’s Enterprise Risk Management – Integrated Framework which highlights four areas that contribute to board oversight with regard to enterprise risk management and we will try to provide constructive, research based, comments on the roles boards play in these areas. We have also shown that one of the lessons arisen from the current crisis is that corporate governance matters. However, this chapter highlights the fact that ERM is not a panacea for risk-proofing a business. Risk proofing a business is a process in which the board plays a crucial role by asking probing question and engaging in productive discussions.

Boards, Corporate Governance, ERM, Risk Management

eBook ISBN: 978-1-63321-539-9