"This is an imperative that says—in order to prevent another financial catastrophe—organizations must change the way they think about risk and consider implementing an enterprise risk management program, or improve the one already in place," says Joseph A. Restoule, CIP, CRM, RIMS president and leader of risk management at NOVA Chemicals Corporation. "RIMS believes that the key to successful ERM practices depends on certain behavioral attributes of the organization at all levels."
In the executive paper, RIMS contends that there were a number of behavioral breakdowns that contributed to the financial crisis. These failures include the over-use of financial models, the over-reliance on compliance and controls, the failure to understand risk tolerance and the failure to embed risk management within the organizations. Additionally, there was no governance failsafe built into risk management frameworks.
"The 2008 Financial Crisis: A Wake-up Call for Enterprise Risk Management" is available at RIMS Resource Library at www.RIMS.org/ERMwhitepaper.