I actually receive a hard copy of the Wall Street Journal. I realize that is hard to believe. But since my son gets both an electronic and hard copy with his subscription, he very kindly directs the hard copy to me.
While I would like to say that I sit down and read it every day, it’s more likely that I peruse the summary section and move on from there. But when I do have the time, I still enjoy reading a newspaper with a cup of coffee.
One morning this week, I was struck by a theme in a number of articles I was reading. It was this idea of the risk associated with lack of meaningful communication and group think. Naturally, I was drawn to a front-page article about a large bank that recently suffered a huge loss due to inadequate risk management systems. To sum up, everyone knew the risks, but no one said anything.
Then I read an op-ed piece about government and how it takes courage to stand alone for the right purpose, rather than staying with the group and being wrong. Finally, another article extolled the virtues of diving deeply to truly understand the nature of an issue rather than being quick to judgement with limited information.
All three of these situations presented the same issue: risk will increase when there is not adequate communication, about the appropriate facts, in a setting that fosters the ability to challenge the obvious information.
This happens all the time in business. Few take the time to focus on what is possible, show the courage to point out the flaws in the group’s thought process or simply check the facts. There is no crystal ball in life, but when you create an atmosphere of open communication and you challenge the status quo (whether you have a formal risk management framework or not), the risks will bubble to the surface.
Take time to test this in your organization by asking these simple questions: Do you encourage the right behaviors? Are employees given the ability to voice their concerns and be heard without repercussion? Do you have a culture that celebrates risk-taking in the correct manner? Or do you have a group of individuals afraid to speak the truths when the risks outweigh the benefits?
That’s where enterprise risk management comes into play as a valuable asset for any financial institution. Click here to learn more.
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