No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights
Home Compliance

25 Reasons for Risk Management Failure

by Richard Leblanc
April 28, 2015
in Compliance
risk management failure

I recently spoke to directors and officers about oversight of risk management by boards of directors. I prepared a list of 25 reasons that risk management failure happens, based on my experience assisting boards, including boards that have failed and boards that cannot afford to fail. Almost all of what follows below is based on real examples. I have never encountered a risk management failure where the board was not at fault, based on what the board said or did, or failed to say or do.

Here are 25 reasons for risk management failure:

1. Lack of enterprise risk management expertise on the board.

2. Governance gaps over a material risk(s) within the board or across committees.

3. Directors incapable of identifying and fully understanding the risks, or worse yet, don’t want to understand. Committees show no interest when they should be shocked.

4.  Internal oversight functions reporting to management instead of the board. A complacent board does not correct.

5. Directors do not insist on a real-time line of sight over material risks and their mitigation/treatment.

6. Not upgrading information systems to track, monitor, integrate risks.

7. Lack of oversight of the process by which management identifies, assesses and actions the risks.

8. Lack of conversations, common vocabulary and prioritization of the risks.

9. Lack of internal audit, or not listening to internal audit.

10. Internal controls that are weak, even non-existent, or capable of management override.

11. Not addressing interaction of risks, their speed, and exogenous shocks in modeling and scenario planning.

12. Not considering impact on reputation, which can be greater than the primary impact considered.

13. Immature controls over non-financial material risks, especially safety, operations, reputation, terrorism, bribery, technology.

14. Risk appetite frameworks do not result in known thresholds, beyond which senior management and when necessary the board is notified.

15. Lack of independent, coordinated assurance of internal controls provided directly to the board.

16. Risk culture defective (toxicity, bullying, risk-taking behaviors) and not remedied.

17. Whistle-blowing defective (not anonymous, no independent channel, no proper investigation).

18. Risk not based on the strategy, business model and key performance indicators.

19. Key performance indicators, and pay incentives and vesting of equity, not risk-adjusted.

20. Board or committee cannot direct a third party review of risk governance, a specific risk, or a set of controls.

21. Failure to anticipate and integrate risks. Pockets of acute, unknown catastrophic risk. (This item equals 13 + 6.)

22. Enterprise risk management not really implemented but everyone thinks it is. False sense of reality.

23. Tone at the top tolerates exceptions, complacency, and unequal treatment. Limited downside for excessive or imprudent risk taking. Encouragement, enabling or dependence upon high performing risk-takers.

24. No sense of urgency to remedy the foregoing.

25. The board does not know how bad it is.

The author thanks an anonymous senior risk executive for review of the foregoing items.


Previous Post

Managing Cyber Risk in Health Care

Next Post

Building a House of Bricks: How to Build the Strongest Cyber Security Program

Richard Leblanc

Richard Leblanc

Richard Leblanc, published at Corporate Compliance InsightsProfessor Richard Leblanc is one of Canada’s leading experts on corporate governance and accountability. He is an award-winning teacher and researcher, lawyer, public speaker, consultant, and specialist on boards of directors. He has taught at leading universities including Harvard University. He is a former recipient of Canada’s Top 40 Under 40™award; received a teaching award as one of the top five university teachers in Ontario; and was named to Canadian Who’s Who. Dr. Leblanc brings to business and professional audiences a depth of information from his extensive research and work with over 150 organizations; and training, assessment and development of over 1,000 directors and managers. He is engaging, dynamic and personable. Because of his work with leading companies and current research, Richard is always on the cutting edge of emerging global developments. Dr. Leblanc possesses an extensive and diversified professional network. He is the founder of the LinkedIn Group “Boards and Advisors,” with over 14,000 members globally, which is the largest and most active online corporate governance group. His work, directly or indirectly, has impacted companies throughout the world, including those that have used Richard’s methodology to strengthen their governance effectiveness and accountability practices. Dr. Leblanc possesses a Bachelor of Science degree, an MBA, Canadian and American law degrees, a Masters in Law, and a PhD focusing on corporate governance.

Related Posts

supply chain

Only 1 in 4 Manufacturers Have High Confidence in ESG Readiness of Their Supply Chains, Survey Finds

by Staff and Wire Reports
January 27, 2023

Ever-evolving regulatory requirements, consumer demand and investor expectations are all forcing manufacturers to increase the transparency of their supply chain,...

cco pressure

Survey: CCO Pressure High, Resources Low

by Staff and Wire Reports
January 27, 2023

Too few organizations are embracing compliance culture, according to a survey by FTI Consulting and Ethico, which found that while...

growth what next

Growing Pains: Mid-Sized Auditing Firms Are Seeing an Influx of New Clients, But at What Cost?

by Jey Purushotham
January 25, 2023

The era of exponential growth among mid-tier accounting firms is upon us, driven largely by the trend of top-tier firms...

board tech purchase

Directors: Don’t Approve a Tech Purchase Without Asking These Questions

by Jean Hill
January 25, 2023

Board directors don’t need to be able to fix a broken server, but they do need basic technology competence, which...

Next Post
cyber security

Building a House of Bricks: How to Build the Strongest Cyber Security Program

Compliance Job Interview Q&A

Jump to a Topic

AML Anti-Bribery Anti-Corruption Artificial Intelligence (AI) Automation Banking Board of Directors Board Risk Oversight Business Continuity Planning California Consumer Privacy Act (CCPA) Code of Conduct Communications Management Corporate Culture COVID-19 Cryptocurrency Culture of Ethics Cybercrime Cyber Risk Data Analytics Data Breach Data Governance DOJ Download Due Diligence Enterprise Risk Management (ERM) ESG FCPA Enforcement Actions Financial Crime Financial Crimes Enforcement Network (FinCEN) GDPR HIPAA Know Your Customer (KYC) Machine Learning Monitoring RegTech Reputation Risk Risk Assessment SEC Social Media Risk Supply Chain Technology Third Party Risk Management Tone at the Top Training Whistleblowing
No Result
View All Result

Privacy Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2022 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe

© 2022 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT