The 2008 crisis certainly revealed the risk-management shortcomings in the financial services sector.

However, the problems in financial services are simply the most visible evidence of ways in which high-danger risks have come to pervade the business arena and now are subtly embedded in all sorts of business processes.

Consider, for example, the way in which the design of today’s performance-based compensation packages, not just in banking but in almost every sector, underestimate risk factors connected to business decisions, a development which gives employees and managers greater incentives to take risks.

… that generate severe adverse consequences with small probability but, in return, offer generous compensation the rest of the time.

… managers collect premiums in ordinary times for what could be called disaster insurance” … Until the disaster strikes, “they can pocket those premiums.”

There’s more discussion of this in the second installment of my three-part Special Report on Enterprise Risk Management (ERM) for Risk & Insurance Magazine.

This includes important points that are made

• by University of Chicago economist Raghuram G. Rajan in his paper “Has Financial Development Made the World Riskier?”
• in a study from Zurich Financial Services “Dealing with the Unexpected: Lessons for risk managers from the credit crisis.”

Here are links to my articles:

Learning From ERM’s Year of Living Dangerously

http://www.riskandinsurance.com/story.jsp?storyId=183204535

Enterprise Risk Management Derailed?
http://www.riskandinsurance.com/story.jsp?storyId=183214881

Ratings Analysts Speak on ERM

http://www.riskandinsurance.com/story.jsp?storyId=183214679

A great example of the double-edge nature of risk and reward is provided by the situation that is confronting risk managers.

“ERM [Enterprise Risk Management] provides an absolutely unbelievable opportunity [for career advancement] for a risk manager” according to an executive recruiter who specializes in risk professionals — but who also warns that, on the other hand,  “I’ve seen situations where … eventually the risk manager ends up losing his or her job.”

There’s more discussion of this and related issues in the third installment of my three-part Special Report on Enterprise Risk Management (ERM) for Risk & Insurance Magazine.

Here are links to articles and sidebars in that installment.

The Double-Edged Gift of ERM

http://www.riskandinsurance.com/story.jsp?storyId=192585755

Raising the Risk Executive’s Profile

http://www.riskandinsurance.com/story.jsp?storyId=193285691

Risk management is soaring as a corporate priority.

To pick just one indication, a recent survey of corporate board members found that

70 percent of audit committee members and more than 65 percent of the CFOs ranked ERM [Enterprise Risk Management] as the No. 1 challenge for their organizations over the next 12 months, overshadowing worries about improving financial reporting and internal controls.

The why’s, what’s and how’s behind this rising priority is explored in the first installment of my three-part Special Report on Enterprise Risk Management (ERM) for Risk & Insurance Magazine.

Here are links to articles and sidebars the that first installment.

Reflections on ERM Inflections
http://www.riskandinsurance.com/story.jsp?storyId=165417938

ERM’s Major Challenges
http://www.riskandinsurance.com/story.jsp?storyId=166276165

ERM Makes a Case for Itself at Cisco
http://www.riskandinsurance.com/story.jsp?storyId=166275949

And here are links to a few  earlier pieces that I’ve written about ERM.

Ratings’ Enterprise Five
http://www.riskandinsurance.com/story.jsp?storyId=126851990

ERM Program at Risk School Takes Flight
http://www.riskandinsurance.com/story.jsp?storyId=86187320&query

Under-the-Radar Changes in Curricula
http://www.riskandinsurance.com/story.jsp?storyId=86186105

State School Reinvents Risk Management Program
http://www.riskandinsurance.com/story.jsp?storyId=86186457

Here are my latest articles for Risk & Insurance magazine in my on-going coverage of emerging trends in the ways in which businesses are dealing with risk.

Ratings’ Enterprise Five
S&P’s Hands-On Practitioner

These pieces provide profiles of the executives at the Standard & Poor’s, AM Best and Fitch credit ratings firms who are leading the agencies’ ramped-up initiatives to evaluate companies’ risk management programs … and to more significantly use those evaluations as criteria in their ratings of the creditworthiness of those companies.

Stay tune for the major, three-installment Enterprise Risk Management Special Report on which I am working and which will be appearing in early 2009.

Recently, I’ve been focusing on a set of increasingly important, powerful, complex and intriguing connections between risk and innovation.

Part of my work has involved articles for Risk and Insurance Magazine, and an initial result of that work is a set of pieces that have appeared in the April 15 issue of the magazine.

This editorial package looks at major changes that are taking place in leading academic programs that focus on Risk Management.

My articles for the April 15 issue now are available online on the Risk and Insurance website.

You can find them at:

Risk Education In-Depth Series (Part 1): Reprogramming an Enterprise

State School Reinvents Risk Management Program

ERM Program at Risk School Takes Flight

Under-the-Radar Changes in Curricula

Impact Extends Beyond the Classroom … to the Library