Yet this dream tends to play out like this: We feverishly grab at weights that are too heavy, do that extra squat for "good measure" or then overdo it on the treadmill. We want health now--no, correction, we want it yesterday. Next day, we walk stiff-legged, the very thought of working out again sounds comparable to pouring lemon juice into an open wound. With that, gone is the ambition of a healthy lifestyle. Gone is any semblance of discipline.
I pondered this scenario when I recently reviewed the "The Global CFO Study 2008--Balancing Risk and Performance with an Integrated Finance Organization." The study was devised from interviews and analyses of performance, risk and governance issues. More than 1,200 finance professionals in 79 countries participated.
Perplexing findings were that 62 percent of respondents from the $5 billion-plus companies surveyed experienced a material risk event in the last three years, 42 percent admitted not being prepared for them and 52 percent acknowledged still not having a formal risk management program!
Hello? Has everyone left the gym? Do our C-suites find the task of true risk management too difficult? Do they feel that the "weights" are too heavy? Do they simply need better instruction? What is happening? Where is the corporate self-discipline?
Self-discipline entails systematic instruction fueled by willpower. It requires strict adherence to behaviors that result in long-term improvement, not just instant gratification.
The study further suggests that North American companies are still mostly compliance driven. We rely on our legislators to act as our "personal trainers," to stand over us and guide us. We, in turn, obey subserviently and in trepidation as we question their credentials and competence. What a way to function. How dangerous. How risky.
Corporate self-discipline can be trained--disciplined decision-making,risk identification and risk communication. Just as different muscle groups develop progressively with different exercises, there are different exercises to build risk management muscle. Scale back and build risk management muscle slowly in order to get stronger. Pick up some of the smaller weights at first, such as acceptance and incentive creation.
Acceptance--perceive your risk management reality accurately and consciously acknowledge what you learn. Without acceptance you are in denial. Take stock of the "excuses" used for not exercising risk management practices. Take stock of where and how risk information gets bottlenecked or muffled. The bottom line is to execute, and it may be simpler than you think to gain traction.
Create Incentives--uncover what incentives exist in your organization for surfacing risk issues. At minimum, create opportunities for individuals to voice their concerns or ideas free of any consequences. You likely have persons burdened with risk knowledge, but no mechanism exists to unload this precious information. It could be as simple as creating a "risk box" or hosting a forum.
The time is now to show some willpower. Corporate health and sustainability are defenseless without strong risk management muscle. We need no more nudges to get us off the couch and start exercising.
JOANNA MAKOMASKI is the risk management columnist for Risk & Insurance®. She manages risk for an energy transportation and distribution company.
July 1, 2008
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