Paul J. Sobel was approaching a crossroads in his long career when Georgia-Pacific Corp came calling to ask him to serve as its chief audit executive. Sobel previously performed the same role at three other public companies—two in the energy business and one in publishing—and before that was a partner at the late accounting firm Arthur Andersen, leaving just prior to its collapse. “I really knew very little about the paper, pulp and building products industry, but G-P put a great opportunity in front of me,” he explains.
The opportunity was to develop a methodology for enterprise risk management at the Atlanta-based manufacturer. Sobel is something of an ERM pioneer. He first learned about this holistic process for identifying, assessing and mitigating potential risk exposures in the 1990s at Andersen, and in 2003, wrote one of the first books on the subject from an auditor's perspective—“Auditor's Risk Management Guide: Integrating Auditing and ERM.” Sobel also implemented ERM at Mirant Corp. and Aquila, his two previous employers.
“I've always tried to approach ERM in a more practical than theoretical way, and writing the book helped me to demystify it and make it a bit more contextual and understandable,” he says. “I now think I can apply it to most types of organizations, not just banks and energy companies.”
While he learned in his job interview that G-P, which is owned by Koch Industries, already had a sophisticated risk management approach, his task was to ensure the ERM methodology aligned with Koch's philosophy, developed and refined by its co-owner, Chairman and CEO Charles Koch, over the past 40 years. Called MBM (for Market-Based Management), it involves a culture that focuses on 10 specific attributes, such as integrity, humility and challenging the status quo, in considering policies, practices and conduct—“shared values that guide individual actions,” the company's Website explains.
“Koch really appreciates diversity of thought and challenging the status quo in a respectful manner, which helped me in moving the internal audit capabilities within G-P more broadly forward,” Sobel says.
Although he concedes that after only a year and a half at Georgia-Pacific, he is still at the starting line in implementing ERM, Sobel says its principles are already inspiring managers and employees to develop ideas for improving risk identification and mitigation in their respective areas.
His work to date receives praise from Georgia-Pacific CFO Tyler Woolson. “Paul brought a strong base of audit and risk management knowledge to Georgia-Pacific, as well as the leadership experience to move this knowledge from theory to practice, which will continue to benefit our organization over time,” Woolson says.
In the meantime, Sobel recently completed another book (with Kurt Reding, a professor at Wichita State University), called “Enterprise Risk Management: Achieving and Sustaining Success.” Sobel says the book helps organizations validate and improve ERM by aligning their ongoing audit activities with ERM objectives. It's published by the Institute of Internal Auditors, on whose board he serves as senior vice chairman.
Although auditors typically are perceived as a humorless lot, Sobel isn't all business. When he worked in London for Andersen in the 1980s, he began to enjoy English beers and ales, and started compiling a list of all the different brews he'd consumed. That list is now 1,300 beers strong.
See Treasury & Risk's 2012 100 Most Influential People in Finance list here.
See a slideshow of the risk management executives on this year's list here and complete coverage of the list here.
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