U.S. Steel is Latest Manufacturer to Adopt Chief Risk Officer Role

Aug. 3, 2011
Companies seek more control over business risks with newly created position.

U.S. manufacturers find themselves increasingly exposed to risks that could put investments in jeopardy. Whether it's a national debt crisis or currency fluctuations, companies see the need to be more mindful of potential economic pitfalls.

Global exposure to such variables have prompted more companies to adopt the chief risk officer role.

"With SEC risk requirements, an increasingly volatile macroeconomic landscape and an energized regulatory environment, board and senior management are much more attuned to identifying and managing the major risks to their objectives," says Michael Bechara, managing director of Granite Consulting Group Inc.

One of the latest manufacturers to adopt the CRO position is United States Steel Corp.

The company announced the move Aug. 1 when it appointed former Senior Vice President and Treasurer Larry Brockway to the position. In his role as CRO, Brockway is responsible for establishing a more integrated and companywide approach to the assessing, analyzing and monitoring business risks and identifying risk-management strategies, the company said.

U.S. Steel would not comment on why the company decided to create the CRO position. But some people familiar with the CRO role in corporations say more companies are creating the position as they grapple with greater global risk exposure.

"Let's say U.S. Steel is going into a market to get ore, maybe a third-world country where labor isn't good or working conditions are poor," says Mark Williams, a risk-management expert and member of the finance and economics faculty at Boston University. "They have to understand whether they're willing to take that risk of an accident or death and how that can damage their reputation. So this is where a senior-level person comes in."

In the past, risk oversight within major global manufacturers took place in silos throughout separate departments, sometimes in different countries, says Williams, author of "Uncontrolled Risk: The Downfall of Lehman Brothers and the Decline of the Global Economy." Now, companies are looking for one person to oversee all risks taking place across the globe in different departments.

This helps the board and senior executives determine whether the risk associated with a potential business move is worth taking, Williams says.

"If you take these risks independently in each department, you don't realize the big picture and how that impacts your company," Williams says.

About the Author

Jonathan Katz | Former Managing Editor

Former Managing Editor Jon Katz covered leadership and strategy, tackling subjects such as lean manufacturing leadership, strategy development and deployment, corporate culture, corporate social responsibility, and growth strategies. As well, he provided news and analysis of successful companies in the chemical and energy industries, including oil and gas, renewable and alternative.

Jon worked as an intern for IndustryWeek before serving as a reporter for The Morning Journal and then as an associate editor for Penton Media’s Supply Chain Technology News.

Jon received his bachelor’s degree in Journalism from Kent State University and is a die-hard Cleveland sports fan.

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