“Risk oversight” describes the board of director’s role in the risk management process. Effective risk oversight determines that the company has in place a robust process for identifying, prioritizing, sourcing, managing and monitoring its critical risks, and that this process is improved continuously as the business environment changes.
The risk oversight process enables the board and management to develop a mutual understanding regarding the risks the company faces over time as it executes its business model for creating enterprise value. There is no one size that fits all. A board has the flexibility to organize itself in a manner that makes sense in view of its company’s size, structure, complexity, culture and risk profile.
Risk oversight is a high priority for today’s boards of directors. This issue of Board Perspectives: Risk Oversight provides suggested questions that boards may consider, as appropriate to the entity's operations, as they seek to clarify their risk oversight responsibilities.