Not long ago Russell Paquette, the treasurer of Recreation Equipment Inc., spent a Wyoming vacation creating and repairing footpaths along the Continental Divide. Now, at REI, he is building a different kind of pathway from scratch: an enterprise risk management (ERM) system that will seamlessly integrate all strategic, operational, financial and governance risks throughout the entire organization. "It's an ongoing challenge," says Paquette, a seven-year REI veteran who stepped into the treasurer's job in March. "It could take four or five years to complete."

Paquette's first step was getting board buy-in to what will become an expensive, critical, lengthy and possibly rocky journey for the $1.3 billion outdoor gear and clothing company. Paquette, who is only 38, has no illusions. "It is clearly a very difficult process," he says, estimating that only about 10% of businesses that set down this path emerge with a truly holistic, enterprise-wide system. "It's one thing just to mitigate risks through traditional approaches, say, insurance hedges," says Paquette. "But ERM will include monitoring, mitigating and transferring all kinds of risks–from supply chain to compliance to environmental to liquidity and beyond."

Paquette isn't new to the trailblazing game. As REI's assistant treasurer, he essentially created an efficient treasury where little treasury of any kind existed before. Mission accomplished, he's now taking on the ERM challenge, starting with a gap analysis across the entire organization to assess risks. Then, under treasury's leadership, representatives from departments throughout REI will meet to prioritize tasks and plot strategy, explains Paquette. For technology help, he plans to bring in third-party experts. "That's not our expertise," he says. The timetable for implementation? The gap analysis should be completed in three months with the intent of evaluating potential software solutions by yearend. And based on Paquette's trail-blazing experience, look for a state-of-the art ERM system by 2013.