What is GOVERNANCE?
An Enterprise Risk Culture starts with GOVERNANCE, i.e. the very top of the company beginning with the CEO and the Board of Directors. Also included in the GOVERNANCE function are the Vice Presidents / Officers of the company. It is critical for success that all members of GOVERNANCE take a lead role in solidifying a risk culture throughout the company.
Focus On Risk Enterprises works with companies to increase their success, while reducing costs, by focusing on Key Risks. This is achieved first by understanding how GOVERNANCE defines success as well as the related objectives and strategies to achieve that success. Once success objectives and strategies are identified, the next step is identifying the key risks (i.e. what could prevent the objectives/success from being achieved) both internally and externally. Once the key risks are identified, a plan is developed and implemented to mitigate the risks.
We work with the entire GOVERNANCE team to develop an effective system of internal controls because risk, like success, is the responsibility of the executive team as a whole, not just the CFO.
The first step to building an Enterprise Risk culture is to understand GOVERNANCE'S role and responsibilities toward risk. To start, answer the questions below:
How do you define success for your company, department, and/or team?
Defining success for your company, department and /or team, is the foundation for understanding key risks and their controls. If success is not defined and articulated, you may find yourself in the situation where your people “are busy but nothing ever seems to get done”. This is caused by a lack of clarity as to what success means. Without a clear definition of success, each employee may define it differently and take action accordingly.
How are your company’s values and ethics understood and embodied by all employees, especially the GOVERNANCE function?
The values and ethics of the company must be understood by each and every employee of a company. More importantly, the employees must see the executives and management embody the ethics and values; otherwise employees will quickly learn the values and ethics statements are just words to be ignored. Enron and WorldCom had ethics and value statements; unfortunately they were not embodied by all executives.
How do you hold employees accountable for their actions and results (good and bad)?
Without accountability, employees will be responsible for tasks but not for objectives and outcomes. When things go wrong, finger pointing will be pervasive.
Our Practical Governance & Risk ManagementTM Seminar is a quick way to start moving your executive team to an Enterprise Risk Culture. Click here to learn more….
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