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News October 10, 2011 Issue

What Does Chris Cox Think?

And why do we care?

Because the former SEC Chairman and member of Congress has something to say, thatís why.

Interviewed back in August by Thomson Reuters, Cox shared his thoughts on corporate risk management techniques in the wake of the Dodd-Frank Act, among other topics.

The Dodd-Frank Act mandated board-level risk committees, but companies can benefit from executive risk committees and the appointment of chief risk officers as well, said Cox. Getting a better handle on corporate risk and the "hidden correlations that can multiply the impact of risk on a company" can help avoid surprises down the road that could hit earnings or other performance measures, he said.

Traditionally, companies relied on discrete processes to collect enterprise data to manage the company and satisfy regulatory requirements. The information required was historical and post-facto, he observed. "Regulators, including the SEC, are now requiring information that is risk-based and predictive," said Cox. Itís a big change, but one with the silver lining of aligning information-gathering more closely with what management needs for effective risk management at the board level, and effective risk-based decision making at the management level.