ERM seen emerging as key board issue.

With a wave of leveraged buyouts (LBOs) hitting U.S. companies, enterprise risk management (ERM) has moved to the forefront of issues facing boards of directors and general counsels. That's according to the seventh annual legal study from Corporate Board Member magazine and FTI Consulting Inc., a global business advisory firm.

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In efforts to reduce corporate risk, companies are increasingly turning to ERM, which is intended to provide a systematic approach to identifying, quantifying, managing and mitigating risk. "If crisis management is the remedy to an explosive situation, ERM is the preventive medicine," noted Roger Carlile, leader of FTI Consulting's Forensic and Litigation Consulting segment.

While 45 percent of directors and 48 percent of general counsels spent more time on ERM in 2006 than in previous years, only 27 percent of directors and 25 percent of general counsels said they would like their boards to allow more time for ERM in 2007. "Dedicating more resources to ERM can reduce the number of day-to-day crises that consume directors' and counsel's time," Carlile said.

In other findings, the surveyed groups identified corporate governance and mergers and acquisitions (M & A) risk as the two areas in the most need of an ERM assessment:

* Forty-one percent of board directors said that governance changes comprise the area most requiring additional preparation, compared with 35 percent of general counsels.

* Approximately one-third of each group said that understanding M & A risk should be their company's highest ERM priority.