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ERM and Strategy

Conference Board Releases Research Report About Boards and ERM

The report titled “The Role of U.S. Corporate Boards in Enterprise Risk Management” examines how U.S. corporate boards oversee Enterprise Risk Management (ERM) processes. Conducted by The Conference Board with McKinsey & Company and KPMG’s Audit Committee Institute, the research involved interviews with corporate directors, surveys, and analyses of Fortune 100 board committee charters.

Key Findings:

  • Legal Developments: Evolving legal standards make it prudent for directors to ensure robust ERM oversight processes are in place.

  • Strategic Oversight: An increasing number of directors acknowledge their responsibility to oversee business risk as part of their strategic role.

  • ERM Practices: Directors should consider enhancing their ERM oversight processes to better manage potential risks.

  • Leading Practices: Sound ERM oversight practices are now recognizable in several leading companies, serving as benchmarks for others.

Recommendations to Corporate Boards:

  1. Establish Clear ERM Oversight Responsibilities: Define the board’s role in risk oversight and ensure clarity in responsibilities.

  2. Integrate ERM with Strategy: Align risk management processes with the company’s strategic objectives.

  3. Enhance Risk Reporting: Improve the quality and frequency of risk-related information provided to the board.

  4. Foster a Risk-Aware Culture: Promote an organizational culture that emphasizes the importance of risk management.

  5. Continuous Improvement: Regularly assess and refine ERM processes to adapt to changing risk landscapes.

The report underscores the importance of ERM in today’s corporate governance and provides actionable insights for boards to enhance their risk oversight capabilities.

Click below for a link to the full report.

Citation: “The Role of the U.S. Corporate Board of Directors in Enterprise Risk Management” The Conference Board. June 6, 2006.