In a report issued last month, KPMG emphasizes the need for comprehensive, strategic risk management across an organization. Entitled “The Business Case for a Risk Executive: Leading Efforts to Avoid Surprises, Maneuver through Challenges, and Add Value,” the report notes that most current risk management efforts are specific to particular departments, projects, or regulations, and do not approach risk from an enterprise level. This had led to critical oversights and missed opportunities.
To address this gap, KMPG recommends the appointment of a risk executive. This person’s dedicated purpose is “to help prepare the organization to respond to change and the risks that emerge in changing times, and to turn those efforts into opportunities that benefit the organization.” More specifically, such an executive would unify risk approaches across business units and departments, standardize reporting, and establish a common risk “language.” (Note: Risk modeling software and Monte Carlo techniques play central roles in this effort.)
Expounding on the importance of risk management experts, the report concludes, "Without a risk executive, risk management efforts will likely continue to lag and hamper the organization’s effort to recover. But with a risk executive owning the process, risk management can move beyond a support role and help enable the organization to realize its strategic goals and rebuild business value."