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ERM Program at Risk School Takes Flight
At North Carolina State University, attention has been focused on a new enterprise risk management initiative that the school launched in 2004 to meet the growing corporate interest in the design and implementation of effective ERM systems that can protect and enhance an entity's value.
"Current economic conditions and the ongoing disclosure of new corporate-related scandals are increasing interest among corporate leaders to develop effective methods for identifying, assessing and managing enterprisewide risks," says Mark Beasley, a professor of accounting at North Carolina State who is leading the ERM initiative. "Recent regulatory changes are placing additional responsibility on audit committees or boards to take responsibility for risk management. This requires a more comprehensive approach to ERM in the corporate environment, using consistent methodologies to track and manage risk exposures and other related issues," he says.
"Even before the release in 2004, I was being asked to speak on it across the country, and we realized that there was a lot of interest in the topic," says Beasley. "We could see that this is where the business world is going, and we began to look at it in terms of what it could mean for N.C. State's College of Management and how we are training our students as the next generation of executives." One of the first steps was the launch in January 2004 of N.C. State's enterprise risk management roundtable series as an outreach to business professionals. The topics have placed significant emphasis on issues relevant to firms outside of banking, insurance and finance. For example, recent roundtables have included talks by executives from Microsoft Corp., Dow Chemical Co., RJR Tobacco Co. and Cisco Systems Inc. "The session with Dow focused on the role of the board, the data they are getting and the dialog that is taking place," says Beasley. "The Microsoft talk dealt with cash management and credit issues." More generally, the emphasis on ERM "means that we get into a lot of risk areas that are difficult to quantify--things like reputation risk, a lot of operational risk for industries that go beyond financial issues," says Beasley. "We look at how Sara Lee or Home Depot or Delta Airlines measure and think about risk. For a lot of them, it is a lot more qualitative. "We give attention to quantification, but we are especially trying to emphasize the role of ERM from a board of directors, governance and strategic planning perspective," says Beasley. "We are looking at how ERM has an effect on strategy, on board oversight." In addition to the roundtables, the initiative includes support of research that advances knowledge and understanding of ERM issues and development of undergraduate and graduate business education for the next generation of business executives. B.G. YOVOVICH is a business journalist and author based in Evanston, Ill. April 15, 2008 Copyright 2008© LRP Publications |
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