Haynes and Boone's Newsroom

Jan Sharry in Dallas Business Journal: Board Oversight Doesn't Stop with Risk Committees
12/03/2010

Haynes and Boone, LLP Partner Jan Sharry, co-chair of the firm's Crisis Management Practice Group, tells the Dallas Business Journal that the trend toward creating corporate risk committees will not absolve board members of their oversight duties.

There may be downsides to having risk committees — at least to a degree — some experts say.

For one thing, they “lay additional work on the directors,” said Constantine Konstans, a professor and founding executive director of the Institute for Excellence in Corporate Governance in the School of Management at the University of Texas at Dallas.

All directors should have a high level of expertise in risk management, Konstans added.

“The idea of risk management is so important that you can’t effectively turn it over and make it the exclusive area of one body. Risk is all-encompassing. You don’t push off risk on somebody else by buying an insurance policy.”

Whether risk committees merit forming depends on the particular company, according to Janice Sharry, partner and corporate securities lawyer at Haynes and Boone LLP in Dallas. She said if a company decides to create one, its board members need to bear in mind that their responsibilities include being aware of, planning for and overseeing hazards the business might face — even if they don’t join the risk committee.

“You don’t want board members to think they can delegate their responsibility, because they need to be involved,” she said. 

Excerpted from The Dallas Business Journal. For full article, click here. (Subscription required.)