Banks' Risk Officers at Risk

In September, two big Wall Street firms, Lehman Brothers(LEH Quote - Cramer on LEH - Stock Picks) and Merrill Lynch(MER Quote - Cramer on MER - Stock Picks), also made changes to their risk management leaders.

Lehman said in September that its CFO Chris O'Meara was named as the brokerage firm's global head of risk management. He will continue reporting directly to Lehman's CEO Richard Fuld.

Merrill Lynch, where CEO Stan O'Neal was ousted after taking a whopping $8 billion in third-quarter writedowns, promoted Ed Moriarty as its chief risk officer. Among his responsibilities are both market and credit risk management across the firm. Moriarty was previously the firm's head of Global Credit & Commitments, responsible for managing all credit risk related to the firm's clients and counterparties.

The job description for a chief risk officer and chief credit officer has changed over the years.

"The role of the chief risk officer is to provide such good-quality information to allow line-of-business managers to make right decisions both for their line of business, as well as for shareholders so that the chief risk officer doesn't have to exercise their veto power," says Kevin Blakely, the CEO of Risk Management Association, a Philadelphia-based organization.

McEvoy says that as the banking industry experienced relatively benign credit markets, "there wasn't much to talk about" when analysts met with bank management teams. But "now it's a laundry list of questions" that sometimes take up a majority of the meetings, he says.

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