You think risk management is not important? Think again and join the
conversation!
The 2016
proxy statement from IBM includes a full page discussion on corporate
governance. Roughly a third of that page
is devoted to the topic of risk management.
To quote a few key lines: “At
IBM, we believe that innovation and leadership are impossible without taking
risks. We also recognize that imprudent
acceptance of risk or the failure to appropriate identify and mitigate risks
could be destructive to stockholder value.”
This is music to my ears!
At the Manhattanville School of Business, we live by this “tag
line”: Managing risk for organizational growth and sustainability. You can’t afford not to.
IBM’s statement raises three important points that are near
and dear for me. First, there is no
success without risk. I could go even
further to say that there’s really nothing—and I really mean nothing—without
taking some risks. Doing nothing means
your firm risks being put out of business just as much as it would by taking
reckless action.
Second, creating new things, stretching horizons, seeking
new opportunities, promoting innovation and leading new initiatives requires
taking risks. Third, and just as
important, wantonly taking risks, not assessing risks in advance would be
imprudent and inappropriate.
Similarly, Consolidated Edison, a premier power providing
company in New York State discloses in its 2016 proxy statement the active oversight responsibility
of its board of directors for risk management and specifies that “Management
regularly provides reports to the Board and its Committees concerning risks
identified through the Company’s enterprise risk management program.”
Many other companies are also intelligently risk aware, many
have or are considering implementing enterprise-wide risk management programs
(ERM). A corollary is that risk
management is not just for financial services companies. I’m using IBM and Con Ed as examples here
because they are large, widely known non-financial companies that are not
start-ups.
Managing a company’s risks is a critical activity, but no
one says that it is easy. On June 7,
we’ll be hosting a no-holds barred discussion on Managing Risks in an Age of
Uncertainty! Join Stamford-PRMIA and the
Manhattanville Institute for Managing Risk and share your views by registering
here: http://www.prmia.org/civicrm/event/info?reset=1&id=6818
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