Nearly half of executives in a new study report their company has a chief risk officer (CRO), up from 33% two years ago. The elevated role in the C-suite has resulted in CFOs losing the top spot as the primary owners of risk management.
The survey of nearly 400 executives, conducted by Accenture at the beginning of this year and released today, reports that only 14% of finance chiefs hold the ultimate responsibility for risk management, compared with 34% two years ago.
In addition, more CEOs can claim ownership of risk. Accenture reports that 23% of the survey respondents, who are all C-suite executives, say their CEO owns the responsibility for risk management, compared with just 13% in 2009.
Steve Culp, managing director of Accenture's risk-management consulting line, says the change is partly due to the rise in CROs in general as businesses have expanded globally and risk management has moved beyond a compliance and modeling exercise. "The overall size of the complexity pie has increased," he says.
Moreover, CFOs shouldn't feel they are losing any authority. Rather, just as the finance chief's position has evolved in recent years beyond number crunching, so has the CRO role, Culp says. "When we look at the financial-services sector, we have seen a higher percentage of C-level executives responsible for risk separately," he says.
In contrast, a recent survey of risk managers and executives by Marsh reports CFOs have the primary responsibility for risk. Nearly 30% of the respondents reported their finance chiefs carry that role.
Any shift is most prevalent at financial-services firms, which were forced to thoroughly reevaluate their risk-management programs following the financial crisis and the passage of the Dodd-Frank Act last summer. A recent Deloitte survey of financial institutions reports 86% have a CRO or equivalent, and most of them report to the board of directors, the CEO, or both.
Accenture also sees the rise of the CRO as a sign that risk management has moved up in importance on the overall corporate agenda and is demanding wider attention beyond the finance department. Smart companies are using it to gain competitive advantage by factoring it into their strategic planning, the consultancy claims.
Forgiveness does not mean permission to continue to hurt you.
An unhappy employee will create a plethora of unhappy customers. Paying an unhappy employee more money merely creates a wealthier, unhappy employee.
When you have a complaint, speak only to someone with the authority to remedy the issue, and be specific about what’s bothering you and what you’d like done to correct it.
Don’t be intimidated by doctors in the examining room. Write your questions out ahead of time if that helps. (And never be intimidated by a doctor in a social situation.)
The truly needy people are those constantly sticking their heads into photos in which they simply don’t belong.
Don’t be reluctant to walk out of an unenjoyable or offensive experience. Many people have wasted months of their lives by sitting through second acts when the first act was already a disaster. It’s not like you’re getting your money’s worth by staying!
Don’t feel like an amateur, you’re better than that. If a millionaire tennis player or golfer requires complete silence when they perform to avoid distraction, how good can they be?!
If you don’t have friends who are unafraid to tell you when you’ve blown it, overstepped, or were lazy, then you don’t have enough friends.
Making a public declaration (about weight loss, performance, goals, etc.) will increase your discipline, since your ego is now in play.
If you want true and continuing respect, lead from the front, don’t push from the back.
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http://dreamlearndobecome.blogspot.com This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Flying on a clear day, a pilot can see everything out of the cockpit: the visual cues match the instrument readings so there is no ambiguity about what the plane is doing. But piloting at night is completely different: you are flying blind so you are entirely dependent on the instrument readings. In fact, you should rely exclusively on the instruments because your internal instincts will lead you astray. Without visual cues, our brains try to makes sense of position and direction by relying on a sense of balance created by mechanisms in our inner ears. But our inner ears can be easily fooled: in the darkness, a plane can feel as though it's ascending or descending when it's doing the opposite.
The inner sense of balance is such a strong instinct that a pilot will be tempted to disbelieve the instruments when they contradict gut feelings. Experienced pilots know to over-ride their instincts, but new pilots can succumb to the strong pull of their intuitions — sometimes with tragic consequences. John F. Kennedy Jr. was a competent pilot with limited night-time flying experience when he departed for a short flight on a hazy Friday night in July 1999. Radar showed his plane ascending and descending repeatedly before it plunged into the ocean. Investigators determined that pilot error, as a result of spatial disorientation, was the probable cause of the crash. The tragic accident is a stark demonstration of what happens when we rely too heavily on our intuition in complex situations where our instinctual "gut feel" doesn't serve us well.
In the course of our daily lives, we humans are skilled day-time pilots. Our instincts help us navigate through myriad straightforward challenges. The problem is that our modern world is characterized by an increasing degree of interconnectedness among all its parts, giving rise to new-world complexity. And our intuitions are often poorly adapted to complex problem-solving. We are now flying at night, and, like JFK Jr., sometimes flying on hazy nights where the horizon is difficult to make out and where panicked passengers (colleagues, bosses, boards, the public-at-large) are demanding we fix things instantly.
The temptation in these difficult situations is to rely on our ill-equipped intuitions because we are not well-trained for the complex challenges that have exploded onto the scene in our recent evolutionary past. Intuition — a.k.a. "blinking" — derives its power from the expertise that comes from repeated practice, but we have not yet developed proficiency in managing complexity, which is why our intuitions about complex challenges are often deceptive.
Of the many ways our intuitions are mismatched with complexity, the most profound is the basic cause-effect model that underpins all of our thinking: our brains are always automatically searching for simple, single causes to explain all manner of things. Our intuition that every effect has a single cause is a survival-enhancing mental model that is well-suited to a world of straightforward problems. But applying this simple explanatory model to complexity can be just as misleading as relying on your inner ear to tell you where you are. Complex problems are characterized by multiple causal factors, all interacting with each other through intricate feedback loops. The only way to assess complexity is to look for multiple causes and assess how they influence one another (through, for example, system thinking). The temptation to force-fit the single cause-effect model onto complex systems is seductive for two reasons: i) our limited working memory capacity is hard-pressed to juggle multiple interacting factors at one time; and ii) the single cause-effect model works extremely well for the multitude of straightforward decisions we make every minute. So we insist that our politicians provide us with simple cause-effect explanations and implement simple cause-effect solutions. And we expect leaders of all kinds to have quick, easy solutions for all problems.
The financial meltdown of 2008 is a quintessential example of how oversimplified our assessment of a complex problem can be. We gravitate to blaming single individuals (Greenspan, Bernanke, Bush) or institutions (investment banks, mortgage lenders, rating agencies). But the shrewd financiers who avoided, even profited from, the crash were not focused on single elements. They analyzed the whole system — the web of interacting causes that collectively constituted an economic situation that was not sustainable. Likewise, the fix lies in addressing multiple elements within the system.
A smaller-scale example is the never-ending quest of businesses to improve service quality, where the tendency is towards simple solutions like "improve staff training" or "incent customer-friendly behavior." While these initiatives have merit, the perception of service quality, especially as measured by customer surveys, is influenced by a host of interacting factors such as the company's advertising, degree of positive media attention, visibility and charisma of the CEO, product selection, and many other elements that re-enforce one another. Only a multi-pronged approach fosters the kind of system that garners high service ratings: there is no silver bullet.
Many modern-day challenges are not reducible to simple cause-effect equations. Our only hope in dealing with complexity is to over-ride our intuitions with more sophisticated ways of interpreting the world. Complex problems require complex thinking; complex thinking is the more difficult path, but it is the more productive one.
Ted Cadsby is a corporate director, principal of TRC Consulting, former executive vice-president of the Canadian Imperial Bank of Commerce, and author of two books on investing.
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http://dreamlearndobecome.blogspot.com This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
