The Directors and Chief Risk Officers group (“the DCRO”) today issued its guidance to organizations seeking to better govern risk through the identification and recruitment of Qualified Risk Directors to their boards of directors and risk committees of the board.

In the spirit of the Audit Committee Financial Expert, where specific board members are designated as experts in the analysis of financial statements and control processes, the QualifiedRisk Director guidelines were developed by an international group of active board directors and chief risk officers to assist organizations in identifying members of their board with expertise in the governance of risk.

“An understanding of risk and its proper governance is not just about protecting organizations from large, unexpected losses - although that is very valuable,” said David R. Koenig, Chief Executive Officer of The Governance Fund Advisors and Executive Chair of the Qualified Risk Director governance council. “Risk governance is equally about how organizations can pursue the goals they have established, with more success,” he continued. “Qualified Risk Directors make those goals more achievable.”

The Qualified Risk Director guidelines are designed to aid in the identification and recruitment of risk governance experts to boards of directors and their risk committees, where present. They are being distributed to companies around the world and to regulators that have shown an interest in advancing the governance of risk at the board level. According to the guidelines, they are designed for voluntary adoption. However, their inclusion by regulators in ongoing assessments, or in the development of future requirements, will assist in the advancement of risk governance practices across institutions of all kinds.

The Qualified Risk Director guidelines are freely available for download.

About the Directors and Chief Risk Officers group - The DCRO is a voluntary assembly of more than 1,600 board directors, chief risk officers, and other c-level executives whose work involves the governance of risk. Members come from more than 100 countries and represent large and mid-size organizations, both for-profit and non-profit. Visit http://www.thegovernancefund.com/DCRO/ to learn more.

For more information, please contact David R. Koenig by e-mail david(dot)koenig(at)thegovfund(dot)com.

Qualified_Risk_Director_Governance_Council.pdf

DCRO Qualified Risk Director Guidelines - Final.pdf

You need to be a member of Global Risk Community to add comments!

Join Global Risk Community

Votes: 0
Email me when people reply –

Replies

  • Tom and Craig, thanks so much for your comments and to Boris for featuring this post.

    The feedback that we have received since its release last week has been both overwhelming and positive. We're very encouraged that so many are finding this to be a helpful document and are already sharing it with their boards and networks.

    Craig, we didn't mention trading as a specific experience required. However, we do emphasize that experiences need to be relevant to the risks the organization faces. So, a Qualified Risk Director on the board of a fund, prop shop, or CTA, for example, would be much likely to be better at that role if they had the experience you suggest. It's not required - as Tom mentions, there are so many broad risk governance issues that are taken up by the board - but it might be a key differentiator where trading or market exposure are fundamental risks of the entity.

  • Business risk management is so much bigger than any single type of risk.  It is much more than financial loss on any type of transaction.  Suppliers, customers and clients, regulators, facilities, processes, employees (the list goes on) all bring risks to the enterprise.  Any of these risks can seriously impede progress toward goals.

    Craig Marderstein said:

    This document is useful. However, I would note that nowhere in the document does it mention the value of trading experience. After all, risk is not something that can ever fully be understood through someone else's experiences. A risk manager can never be exceptionally qualified if they have never themselves traded, taken risk, and experienced winning and losing first hand.

  • This document is useful. However, I would note that nowhere in the document does it mention the value of trading experience. After all, risk is not something that can ever fully be understood through someone else's experiences. A risk manager can never be exceptionally qualified if they have never themselves traded, taken risk, and experienced winning and losing first hand.

  • The third paragraph is significant.  Too often, especially in the financial service world, risk management is limited to only regulatory risk and credit risk.  Every enterprise needs this definition of risks for a valuable risk management program.  

This reply was deleted.

Introducing the Global Risk Series - Book 1 Risk Management How Tos

Dear GlobalRisk Community member, Our community’s mission is to foster business, networking and educational explorations among members. Learn from some of the top experts in the industry as they clearly explain how to approach the most important Risk management concepts. Check out their expert tips and use the link at the end of each article to navigate back to the website to leave your comment or ask a question.   Some of the topics include: How do you Explain Risk Appetite?  How to Prepare a…

Read more…
16 Replies · Reply by GlobalRiskCommunity Mar 21
Views: 1126

[Free COVID-19 Framework] What's the path to recovery look like?

We created a free presentation (attached), which discusses both global and organizational impacts of the COVID-19 pandemic, along with critical actions organizations should take immediately. This presentation introduces a framework that helps regions and organizations navigate a path to recovery via 9 potential scenarios. These scenarios capture outcomes related to GDP impact, public health response, and economic policies. The presentation also breaks down 6 immediate and critical actions…

Read more…
4 Replies · Reply by Steve Diaz Jul 8, 2023
Views: 243

If risk management is about decision making, are current risk management solutions irrelevant?

Now that the updated COSO and ISO risk management standards emphasize a connection to enterprise objectives and decision making, does this mean ERM and GRC solutions focused on risk registers and regulatory compliance are missing the true value of risk management?Will current risk management solutions evolve to integrate more decision support functionality or will standalone prescriptive analytics and other technology solutions take a more prominent role in enabling risk-informed…

Read more…
3 Replies
Views: 172

A question related to classification of instruments between trading and banking book.

We have an interesting question from one of our members.       "We usually perform OTC FX transactions with clients backed-to-back on the market (with Banks). Now we are going to perform a FX swap (i.e. Spot + forward) JPY/EUR for the Bank account for 1 week at the longest. The purpose is to get EUR place @ CB for LCR compliance purpose (no trading purposes). Bank's Management think that this should be considered as a trading position and therefore be classified within the Bank's trading book.…

Read more…
5 Replies · Reply by Prisha Singh Dec 26, 2023
Views: 380

Plunging oil prices: curse or blessing in disguise?

The recent sudden crash of oil prices has had a major impact on the world economy, leading to many troubled faces in the international arena. The Russians fear the effects of yet another powerful hit on their economy, Venezuela seems to be considering default and the Americans are weary of the consequences for its young and emerging shale oil industry. And then you have the Middle East, where the smallest match is enough to ignite the largest fire. But are these worries really justified or…

Read more…
1 Reply
Views: 112

    About Us

    The GlobalRisk Community is a thriving community of risk managers and associated service providers. Our purpose is to foster business, networking and educational explorations among members. Our goal is to be the worlds premier Risk forum and contribute to better understanding of the complex world of risk.

    Business Partners

    For companies wanting to create a greater visibility for their products and services among their prospects in the Risk market: Send your business partnership request by filling in the form here!

lead