A PROPOSED RULE by the Securities and Exchange Commission to require businesses to increase their risk management disclosures is a positive step.

The SEC’s proposed rule, No. 33-9052, would require companies to disclose the involvement of their boards in monitoring operational and financial risks (BI, July 20).

We think this not only is reasonable but also long overdue. If boards are not ultimately responsible for managing the exposures that could threaten an organization’s survival, let alone ability to build value, who should be?

This proposed rule is not surprising, as other governmental agencies also are trying to craft policies to prevent the financial crisis from recurring. Implicit in the SEC’s action is that risk oversight was weak or lacking at many organizations. Indeed, the crisis might not have occurred had boards been paying closer attention.

Observers suggest the SEC rule would present an opportunity for risk managers to expand their skill sets. We agree that the more knowledgeable a risk manager is about his or her organization and the more able to communicate risk information, the more valuable that person is to the organization.

All organizations can benefit from implementing stronger risk oversight, and we hope moves such as the SEC’s encourage prompt action.

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