Will the new SEC rules for 2010 put your board leadership at greater risk?

To answer, begin by asking the right questions.   (Third of three posts on new requirements found in Item 407(h) of Regulation S-K under the Securities Exchange Act of 1934.)

Starting in the 2010 proxy season, all U.S. public companies are required by the SEC to include in their proxy the extent of the board’s role in risk oversight and the effect this oversight has on the board’s leadership structure. In order to frame a company's responses with an eye toward their strategic goals, it’s not only an issue of asking the right leadership questions pertaining to risk management – but the most relevant.

As the drafts of new disclosure statements are created here are a few of the questions directors should ask themselves:
 
1. To what level does our current leadership structure support our risk oversight?

2. In what ways is the board most confident about risk oversight?

3. Is there another plausible interpretation that might diminish our confidence level?

4. Are we relying too much on a few board members with impressionable backgrounds?

5. How do we decide what we are supposed to monitor?

6. Are we comfortable with the degree in which the board informs itself on risk intelligence versus relying upon others?