Reshaping the Risk Agenda

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Following an excellent session on emerging legal trends, the NACD Conference shifted topics to risk and how attendees should view their board’s risk agenda. Led by KPMG’s Mary Pat McCarthy, the panel featured directors highly experienced in risk and crisis situations. Panelists included:

  • Chuck Noski: Vice Chairman of Bank of America and Director of Microsoft
  • Jim Richardson: Director of FEI and Digimark; Chairman of Lewis & Clark College
  • Mike Smith: Director of REI

McCarthy opened the session by noting that “The risk agenda is shaped to a large degree by lessons learned from the past.” To effectively
oversee risk, directors should know that the unimaginable does happen. From his experiences as a director of Morgan Stanley and CFO of AT&T, Noski agreed. Recommending that directors be diligent about risk management oversight, he encouraged boards to “consider the things that common knowledge suggests won’t happen,” and urged management to think broadly about what could happen.

The discussion shifted to information technology (IT) risk oversight, listed as the top audit committee focus by KPMG’s Audit Committee Institute’s Annual Audit Committee Survey. According to Richardson, it is crucial for companies to have strong IT teams. With the rapidly changing pace of technology, directors should be able to rely on their IT personnel to stay current with trends. Noski listed three areas he sees transforming risk oversight at the board level:

  1. Consumerization of technology
  2. Cloud computing
  3. The increasing sophistication of hackers

The conversation moved to a topic not as often discussed: oversight of talent risk. As a director of REI, Smith was able to provide recommendations to attendees from his experience. In his opinion, the maintenance of human talent is extremely important to effective companies. Motivated employees will stay at a company they are proud to work for. To this end, the company should have a mission and an established purpose. Smith also encouraged attendees to allow their employees to work on “cool new things.”