NYSE listing rules require audit committees to oversee risk management. How can they do this?
Risk management oversight should fit the particular company being overseen. Nonetheless, some general guidelines can be useful. The following points are excerpted from the executive summary of the Report of the NACD Blue Ribbon Commission on Risk Oversight: Board Lessons for Turbulent Times. Risk Oversight. Directors must understand the risks facing the organization they serve, and actively oversee the management of those risks. Boards need to ensure that management has plans to deal with risks that are both short-term and long-term, and both intrinsic and extrinsic to the company. Directors and management should discuss management’s plans not only for addressing risks but also for mitigating their impact—minimizing the “spiral factor” of crisis. Risk oversight should focus on material risks (i.e., risks that would raise concerns for a reasonable person). Risk management. The board should ensure that management (and, if appropriate, the board) establish risk management policies to mini
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