by TK Kerstetter for The Board Blog – Boardmember, April 27th, 2011.
Less than two weeks ago I had the privilege of hosting both our Risk Oversight in the Boardroom and the Compensation Strategies to Build Shareholder Value conferences held at the New York Stock Exchange on successive days. Both these sessions go right to the heart of the two major challenges facing boards today: risk management oversight and executive compensation. I thought I would share some of the issues and topics that seemed particularly interesting to me during the two days.
If I tweeted, which I don’t, (although we did have a Corporate Board Member staffperson tweeting out some juicy morsels during both events) I would have definitely tweeted about how Constellation Energy Group has organized and handles risk management and the board’s oversight. Interestingly enough, it wasn’t really the board’s duties that struck a chord with me, it was the way they make sure the business unit leaders accept the responsibility for managing risk at the business unit levels. First, let me set the stage. On our panel, we had a board member who serves on the audit committee in addition to the chief risk officer for Constellation Energy and during the session, they discussed how they worked together to manage and oversee risk. While that was fascinating, because I really thought they had their act together, the most telling part of their session was describing how they establish their company’s risk/reward culture. To make a long story short, they make sure that all the business managers understand that they are the front line of managing risk and while senior management and the board are always pushing to grow the company, they make sure that the risk thought-process is part of every business-unit head’s strategic plan and subsequent presentations. I’m sorry that I can’t do the session justice in this blog, but the presentation was very compelling and really gave you comfort that Constellation Energy knows what it is doing with regard to enterprise risk management. When the session was done, I felt the chief risk officer was going to get several new job offers and Ann Berzin, the board member, might receive a few new board seat offers. (continue reading… )