A company's CEO may be the person who sets broad risk guidelines and approves an overall strategic risk plan. But to build and maintain an effective risk-management approach, it often falls to the chief financial officer to play the central executive role. Although the nature and extent of their role varies, CFOs are uniquely situated to build and communicate an integrated risk view, optimize business decisions, and build a strong risk culture.

In some organizations, such as financial institutions and commodity trading companies, the risk-measurement team typically reports directly to the CEO. For others, such as processing companies or consumer-services companies, the risk group reports to the CFO. Whatever reporting structure is chosen, the crucial element is that the CFO and the chief risk officer must be closely aligned. In this way the CFO and the risk-measurement group can provide solid direction to boards and senior management who are currently struggling to understand risk.

The CFO's financial-reporting role provides natural insight into the universe of risks across various business units and the impact that those risks, either alone or in combination, can have on the corporation as a whole. The CFO can leverage the finance organization's existing infrastructure to build...