What is the primary role of the risk committee in a typical governance structure?

What is the primary role of the risk committee in a typical governance structure?

• A. To approve the annual budget.
• B. To oversee the risk management framework and ensure policy alignment.
• C. To manage day-to-day operations.
• D. To perform internal audits.

Answer: (B)

The primary role is to provide independent oversight of how risk is managed across the organization, ensuring the risk management framework and policies align with the entity’s risk appetite and strategy. The committee reviews and approves risk policies, monitors major risk exposures, and ensures risk reporting to the board is timely and appropriate, so risk considerations are embedded in decision-making. It does not handle day-to-day operations, nor conduct internal audits, nor approve the annual budget—functions that belong to management, the internal audit function, and financial governance, respectively.

The primary role is to provide independent oversight of how risk is managed across the organization, ensuring the risk management framework and policies align with the entity’s risk appetite and strategy. The committee reviews and approves risk policies, monitors major risk exposures, and ensures risk reporting to the board is timely and appropriate, so risk considerations are embedded in decision-making. It does not handle day-to-day operations, nor conduct internal audits, nor approve the annual budget—functions that belong to management, the internal audit function, and financial governance, respectively.