An interesting article by Henry Keizer, Global Heald of Audit, KPMG International, considers the board’s role in the oversight of an organisation’s risks.
According to Keizer, “…we’ve reached an inflection point for corporate governance, and that effective oversight requires the exercise of healthy skepticism…..[and]….the ability—and willingness—of directors to ask that second and third follow-up question about a risk, or about the risk-management process, is a vital sign of how healthy the board’s risk conversations are—and how firm a handle it has on risk oversight.”
He believes that a key question for every board is “whether any single committee— such as the audit committee, or even the full board—has the time, resources, and expertise to effectively oversee the full range of risks that the [organisation] faces.”
Keizer suggests that strengthening board oversightof risk should include:
– being clear about the board’s oversight objectives
– working with management to agree on the types of risk information a board requires
– ensuring that the culture encourages directors to question, challenge and test management
– invite the right people to the board’s conversations about risk
– ensure that risk oversight responsibilities of teh full board and its committees are clear.
Read the full article here.