Newsletter Sign-up

By B.G. YOVOVICH, who has written for national trade publications for more than 20 years

"I started out in public accounting, got a CPA, did financial reporting, some auditing, and then I ran the benefits department of a company for a couple of years," says Fahrenthold, who now has been involved with risk management for nearly 20 years.

Fahrenthold's involvement with Continental's ERM program began even before the initiative was launched three years ago.

"I had been discussing it with my boss and with the CFO, off and on," says Fahrenthold. However, as has been the case at many other companies, the ERM effort at Continental did not get traction until a member of the company's board of directors raised the issue.

"That was the catalyst," says Fahrenthold. "One of the members of our audit committee had it set up at his organization, and he asked about the level of progress on ERM that we had made here."

As the ERM effort began to get rolling at Continental, says Fahrenthold, the question was whether ERM would belong to the risk management department or the internal audit department.

"Internal audit is more of a process to make sure that the procedures that are in place are being followed," he says. "My view was that ERM encompassed new ideas and new procedures that we had not formalized yet, so it needed a little more of a flexible approach than an audit procedure might take."

Fahrenthold's view prevailed and ERM moved to his department, and his financial experience has helped him with his work on the ERM initiative.

"To be successful in an ERM role, you have to have some financial skills, which is something that a lot of people in risk management might not have," says Fahrenthold. "In the end, everything hits the financial statements, so my background helps me get there."

The Continental Airlines risk manager sees ERM as a big opportunity for himself and for other risk managers.

"It certainly increases the exposure that I have to certain aspects of the business," says Fahrenthold. "As a risk manager, ERM is an opportunity to get out of the insurance pigeonhole. You get more opportunity to get involved in strategy, and it puts you in a position to look at the broad expanse of what is going on in the company--and key areas where something could go wrong."

"You get to provide input into areas where risk exists, but no one had really gotten a hold of it in a very formal way, and it enables you to provide some input up the reporting chain," says Fahrenthold. "ERM is a real excellent opportunity for anyone who is a risk professional to jump in there and expand what they are doing."

At Continental, for example, "I report to the treasurer, and the report that we produce is presented to the audit committee of the board," says Fahrenthold. "That report continues to evolve and improve, and a more formal ERM report will be presented to the full board beginning in early 2009."

January 1, 2009

Copyright 2009© LRP Publications