Risk is Everybody’s Business: Moving Toward Integrated Risk Management

Risk professionals need to break out of their narrow confines and recognize both the necessity and benefits of partnering with colleagues across their organizations. Recent bank failures have underscored the necessity for risk modelers, accountants and economists, in particular, to work in greater alignment.

Traditionally, risk modeling and accounting functions have been distinct and separated disciplines, but effective risk management cannot be achieved without integration between these groups. While derivative pricing models and copulas may be intellectually stimulating, the advanced mathematics of risk have limited value if the underlying data supporting model estimation is incorrect or misunderstood.

Moreover, addressing future risks, such as cyberterrorism and climate change, will be impossible without all groups within an organization working closely together.

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