Business Transformation Requires Transformational Leaders
Leadership and teaming skills are front and center in times of rapid change. Meet today’s constant disruption head on with expert guidance in leadership, business strategy, transformation, and innovation. Whether the disruption du jour is a digitally-driven upending of traditional business models, the pandemic-driven end to business as usual, or the change-driven challenge of staffing that meets your transformation plans — you’ll be prepared with cutting edge techniques and expert knowledge that enable strategic leadership.
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Insight
You only find out who is swimming naked when the tide goes out.
-- Warren Buffet, chairman of Berkshire Hathaway
In Warren Buffet's parlance, the financial tide is now well out, revealing a plethora of companies that decided to go skinny-dipping. One reason for so many companies' nudity in the current financial climate has been the massive failure in enterprise decision making with regard to risk, unintentional as well as intentional. A few vignettes illustrate the magnitude and depth of this failure.
Don’t Throw the Baby Out With the Bathwater
ERM has received its share of the blame for the current financial mess. While there are some problems with current practice, it needs a bit of fixing, not wholesale renovation.
Chuck the Baby, TooAs currently practiced, ERM is useless at best and creates increased enterprise risk at worst. The role of ERM in organizations requires a complete rethinking.
In the introduction to this issue, Guest Editor Bob Charette asks whether we need to rethink enterprise risk management. We need to do some rethinking all right, but risk management practice is the least of our problems. All of our risk management models, frameworks, theories, and templates will continue to fail, no matter how elegant, sophisticated, integrated, or beautifully drawn they are.
Effective risk management is difficult. While our theoretical understanding of risk management and decision theory continues to evolve, the practical implementation of that theory in the real world has been an uphill battle with frequent setbacks. While most executives are quick to acknowledge that risk management is an essential enterprise practice, few can honestly point with pride to the broad accomplishments and sustainability of those efforts.
WHY EXAMINE THE ORGANIZATIONAL POLITICS OF RISK MANAGEMENT?
Organizational politics presents a risk not often accounted for by risk models. It creates one of the many components of risk management risk -- that is, the risk that the risk management process itself is inadequate.
The recent meltdown on Wall Street and in other financial centers serves to highlight the flip side of opportunity and potential. On 29 September 2008, following some modest sell-offs in stock markets in Asia, the Dow Jones Industrial Average plunged by 778 points, a 7% drop over the course of a single day. In just over six hours, more than $1.2 trillion was wiped off the value of US industry -- the first time a daily loss exceeded $1 trillion and the blackest day since the 1987 Wall Street crash.
You only find out who is swimming naked when the tide goes out.
-- Warren Buffet, chairman of Berkshire Hathaway
