Canny
Chairmen, CEOs and NEDs worry that they don't really know enough about the
business. They worry about blind spots.
They're right to worry. Important risks can lie hidden beneath a
"glass ceiling". These mainly
'soft' risks, named for their relation to 'soft' skills, can cause severe
damage. They are often the root cause of other, better known, risks.
These include
many things people discuss in the pub with their peers but never with the boss.
It's typically a deep-seated culture or unrecognised incentives that keep 'Unknown Knowns' hidden from leaders.
'Roads to
Ruin' is a Cass Business School report for Airmic. Its authors included Reputability's
Anthony Fitzsimmons and Professor Derek Atkins.
Through 18 detailed case studies, it provides concrete evidence that
failed organisations were blind to root cause risks that arise from:
Poor leadership on ethos and
culture
Defective internal
communication and information flow
Inappropriate incentives,
both implicit and explicit
Organisational complexity
and change
Inability to see inherent
risks, such as risks to the business model or reputation
Inadequate board skill sets
Inability of NED members to
exercise influence and control as needed
'Glass Ceiling' effects that
prevent risk managers from addressing risks emanating from top echelons
These
blind areas are widespread, but only become obvious when a company faces a
crisis. By then, their destructive power
has become awesomely clear.
Today's
challenge for Chairmen, CEOs and NEDs is to make sure these 'unknown knowns'
are systematically identified and dealt with - before a crisis erupts.
Reputability's team, with its
advanced skills and lifelong experience, is designed to help organisations find
these hidden but existential risks.
