In the wake of the financial crisis, many large financial institutions created new, board-level risk committees to oversee their most critical risk issues. For other industries, the decision to create a risk committee isn’t so simple—and isn’t without some risk-taking itself.
Under Dodd-Frank’s “enhanced prudential standards,” publicly traded bank holding companies with total consolidated assets of $50 billion or more are required to have a risk committee of the board of directors to oversee its risk management framework. Numerous companies also have been required to create the committees as part of settlements with regulatory agencies, and financial regulators in particular have telegraphed their desire to see risk committees as a common practice. But that’s about all so far.
