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"Risk management used to mean buying insurance. That role is now changing, and it's the role of the board to develop a complete view of the types of risks that companies are exposed to and the real challenge is to try to think of the unthinkable," said Dennis Chookaszian, retired chairman and CEO of CNA, alluding to Hurricane Katrina and the World Trade Center catastrophes.

Reuben Hedlund, partner, Hedlund & Hanley, agreed: "If risk management is in its infancy, then directors are still very much in the gestation period, and perhaps only recently have been conceived." He further noted that one important role of the board in risk management is to make sure that the audit, compensation, governance and other committees are working properly. "If these committees are doing their job, then board meetings can focus on the capital resources and the availability of borrowings to meet the demands that are known, as well as those that are unknowable," Hedlund said.

A highlight of the panel discussion was a spirited debate on whether the board should establish a risk committee. One viewpoint was that a risk management committee of the board can devote more time and attention on a highly complex issue. The counter viewpoint was that ERM is such an important issue that the entire board should be involved.

The panelists agreed on other key aspects of the role of the board in ERM, including having well educated board members who can ask the right questions, consider low-frequency but high-severity events, and ensure that the company is taking the appropriate risks. "We have to maximize the use of capital in support of a mandate to enhance shareholder value. This is one of the key elements of enterprise risk management as much as it is to protect against loss," said Rowland Fleming, vice chairman of Export Development Canada (EDC).

Panelists agreed that one of the biggest challenges facing board members is how to balance the company's risk tolerance while also generating shareholder value. Actuaries can help by interpreting the company's appetite and tolerance for risk, without exposing its capital to total loss and at the same time without becoming too risk averse.

Finally, when it comes to approaching the board, panelists emphasized the need to be respectful of a board's requirements and time constraints. They explained that with such great attention being paid in recent years to corporate governance, ERM may have been inadvertently left behind in prioritization. They urged risk managers to encourage its return to the corporate radar.

To that end, James Lam, president of James Lam & Associates, offered words of advice. He urged risk managers to consider the key questions that must be addressed by the board and to provide concise and useful reporting to board members. Lam said a key challenge for risk professionals is how to deliver against the expectations and needs of board members, and how to leverage the board in making risk management more effective. "How do we help them in terms of serving their needs and how can they help us, in terms of our needs?" he asked.

The ERM Symposium is sponsored by the Casualty Actuarial Society, the Professional Risk Managers' International Association, and the Society of Actuaries. This year's event was attended by more than 600 risk management professionals including chief risk officers, chief financial officers, chief actuaries, risk managers, investment professionals, asset/liability management practitioners, representing financial services, corporate and energy enterprises.

The Society of Actuaries is an educational, research and professional organization dedicated to serving the public and Society members. The Society's vision is for actuaries to be recognized as the leading professionals in the modeling and management of financial risk and contingent events.