The Risk Intelligent Board: Viewing The World Through Risk-Colored Glasses

When the risk management structure is optimized, every board committee will have risk on its agenda. Financial risk falls within the domain of the audit committee; compensation risks, the compensation committee; and succession risk, the nominating committee. (Note, however, that overall succession planning responsibility usually rests with the full board, with the nominating committee often taking a lead role in beginning the diligence process.) Each of these committees, in turn, reports back to the full board, which processes the information to develop a full-spectrum picture of risk. And, finally, the loop is closed when the full board addresses risk issues with management on a regular basis.