The Role of U.S. Corporate Boards in Enterprise Risk Management

Having focused heavily on Sarbanes-Oxley requirements and more rigorous corporate governance and compliance standards, U.S. corporate boards are now beginning to assess their evolving role in providing oversight in the area of enterprise risk management (ERM). This paper documents how boards of directors are moving from their current focus on internal control to a more comprehensive ERM program. The research was conducted between November 2005 and February 2006, and consisted of a survey of 127 board members, follow-up personal interviews with a number of them, and a comprehensive analysis of Fortune 100 companies' board committee charters. Specifically, the paper elaborates on the following research findings:- Evolving legal developments make it prudent for directors to ensure they have a robust ERM oversight process in place - An increasing number of directors acknowledge they must oversee business risk as part of their strategy-setting role - Directors should consider making improvements in their ERM oversight processes - Sound ERM oversight and implementation practices are now recognizable in a number of leading companies, and - Corporations may be looking at best-in-class peers for emerging practices in ERM oversight.