If you're limiting the scope of the Chief Security Officer to network and computer related considerations, then you don't really need a CSO. It can be a part of the CIO's domain.
On the other hand, if the job involves all forms of security in all areas, not just IT, the CSO might be a useful position.
Having a network secured from invaders doesn't mean that your data is safe. Unless you restrict such things as hard copy, diskette downloads, e-mail attachments, CD burning and related activities, your data can be compromised even if all your people are loyal members of the organization.
People from outside your organization can compromise your data in various ways. Whether they are the lowly janitors or the high paid consultants,they have the opportunity to create security problems even if that is not their intent.
Ignoring the IT side of things, a CSO could also be responsible for physical security of various types. And for that matter, especially in view of the Enron fiasco, the CSO might be in charge of internal audits.