It’s coming.

By “it,” I mean the granddaddy of U.S. financial “re-regulation.” Just as The Great Depression hatched the SEC, the current downturn/crisis/recession “is about to prompt the most far-reaching renovation of the rules and institutions that regulate finance since the 1930s,” according to longtime Wall Street Journal columnist David Wessel.

OK, so what should we do about it?

I’ll tell you what we shouldn’t do: sit back and nervously wait to see what comes down the pike. It may be human nature to shift into “wait and see” mode during times of anxiety-laden uncertainty, but it pays to be prepared.

OpenPages Vice President Gordon Burnes, who also opposes the “sit and wait” strategy, believes there are a number of steps that organizations can do to prepare for pending regulatory changes. Here are his high-level recommendations:

1. Incorporate a risk-based approach to enterprise governance through a formalized ERM program involving all lines of business and levels of management.

2. Require executive management approval for acceptable risk tolerance levels and share decisions with business line managers as well as the board of directors.

3. Involve business line management in risk assessment activities.

4. Schedule systematic board-level reviews of risk exposure and performance.

5. Ensure that the risk management function reports directly to the chief executive officer rather than through the head of another functional area.

6. Establish separate risk management and auditing functions that are fully independent and adequately resourced.

7. Foster a risk-aware culture through periodic communication and education about risk policies.

8. Include risk management competence as part of a manager’s performance review.

9. Compile detailed, accurate, daily information on exposures across the organization. ###