Risk and risk management are hot topics.1 How public company boards handle risk is being closely scrutinized. Legislation pending before Congress would go so far as to require public companies to create a separate standing committee of independent directors responsible for risk management.2 The SEC recently adopted rules requiring a discussion of the board’s role in risk management when a public company seeks proxies for the election of directors.3 The press has shown itself eager to find executives and directors to shame in the court of public opinion for faulty risk management. And as for the courts of law, it does not take much imagination to predict cases against executives and directors for faulty risk management.
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