Risk is changing, you need to change with it.

• Author: Westfall, Christopher
• Position: EDITOR'S NOTE - Editorial - Brief article

Let's face facts--your balance sheet is dripping with risk.

Financial executives have been relying on enterprise risk management (ERM) for at least a decade as a way to quantify and ultimately control risk. However, ERM is becoming increasingly difficult to measure as the nature of the threats change from financial crises, political stalemates, terrorism and cyber threats.

A majority of CFOs and other financial leaders fear they are not keeping up with new threats. In fact, 59 percent believe the volume and complexity of risks have changed "extensively" or "mostly" in the last five years, according to 2015 Report on the Current State of Enterprise Risk Oversight from the AICPA and the ERM Initiative at North Carolina State University. The report adds that 65 percent of those admitted they were caught off guard by an operational surprise "somewhat" to "extensively" in the last five years.

A big part of that worry is tied to cyber risk, which recently supplanted terrorism as the top threat to the U.S. by Director of National Intelligence James Clapper. "The most pervasive threat to the U.S. financial...