We've heard a lot of talk about the necessity of enhanced risk management processes as of late, especially in light of the financial crises. Vendors certainly sense an opportunity, as most agree that technology will play a critical role. But how much of this is mere rhetoric? 

Well, there are some signs that companies are getting more serious about risk. More seem to be embracing the idea of a chief risk officer. And companies that already have them are giving them more power. A recent survey by the Economist Intelligence Unit (for Navigant Consulting) found gains in companies that were giving their chief compliance officers and chief risk officers more "unilateral authority to intervene and curtail specific business transactions."

But the study also noted a paradox: Even as the financial crisis continues, financial services companies seem to think that "they have adequate risk management practices and philosophies." These same companies, the report suggests, "are now facing significant economic loss and in some cases demise."

An obvious case in point here is AIG. The Wall Street Journal reported recently about the company's Credit Risk Committee, which "even after a $173 billion government bailout, this group, which reviewed and approved risk-taking decisions, remains largely unchanged. At least five of the 10 committee members have served for years, according to internal company documents. Some served as far back as 2003 and 2004, the documents show."

AIG notes that it is committed to strong risk management and that it has create a new board committee help with risk management. Still, the news has provoked some big guffaws on the Internet. 

While AIG is being made the butt of many jokes, it may be in keeping with current practices. We may be in for more of an evolution than a revolution--for better or worse. For one thing, budgetary issues cannot be ignored. At the same time, it may be better to move deliberately with systems that will actually work than to rush into iffy solutions. Which explains why a "surprisingly large" number of executives in the Economist Intelligence Unit poll "are neutral or outright disagree that risk monitoring needs to be improved." - Jim