Is in-house counsel a natural choice for Chief Risk Officer? Probably, and they certainly have a central role in designing methods of managing overall risk. Today there is a greater recognition of the variety, the number and the interaction of risks facing organizations. Many potential risks now facing organizations – avian flu, global warming, terrorist events, and globalization – are so new and severe as to require new thinking about the nature of risk. Most organizations now realize that the usual, segmented way of identifying and addressing risk should change.
Advocates of Enterprise Risk Management or “ERM” suggest that it is a risk management system which is changing the way organizations look at risk and how they implement and take advantage of risk control procedures. ERM holds the potential promise to enhance shareholder value and decrease the cost of capital. ERM leadership may be a risk worth taking.