ABSTRACT
In today’s modern business environment the roles and confluence of ethics, compliance, corporate responsibility, and risk management are all in play. It remains to be seen who at the end of the day will own the domain of values-based, ethical risk management and wear the Risk Leader hat. While the answer clearly is up for debate, one thing remains clear – social media will play a pivotal role and be a powerful vehicle for change. It is all the more important that trust and transparency pervade all transactions and communications, becoming essential elements in fostering a healthy risk environment. Risk Leaders will need to take risks, embrace transparency, and make themselves vulnerable and current.
Risk Leaders need stakeholders’ trust to successfully address organizational risks. Aside from growing cynicism, warp-speed changes in technologies and communication modes compound the challenges risk managers face in securing constituents’ trust. To combat these impediments, today’s risk managers need to venture into unchartered territory and try untested methods. Risk Leaders need to cultivate open, direct dialogue, practice unprecedented transparency, and embrace newly minted communication methods. Balancing these riskier activities with solid risk management strategies and robust audit protocols allows businesses to cultivate, maintain and, if necessary, restore the trust and loyalty of its key stakeholders.
It is not a revelation to anyone – practitioner or academic – that good and bad companies will have failures. The difference between the two is the path chosen to correct the situation and make things right by their stakeholders. If the error is corrected with transparency and honesty, the misstep can be viewed as a badge of honor and resilience. Risk Leaders must learn to embrace the risk of transparency and not be afraid of it. Obviously, the Risk Leader must take intelligent risks, but there are many times action must be taken, even if it is uncomfortable and the outcome uncertain. As much as one might like to think otherwise, there really is no such thing as “no risk,” as not making a decision is often the biggest risk of all.
254We take the position that the roles of the Ethics Leader and the Risk Leader are similar, and in fact may be even more closely aligned in the future. Both roles must deal with risks of all kind, and handle risks ethically in accordance with the company’s organizational values. To carry out their responsibilities, both the Ethics Leader and the Risk Leader act as facilitators and sometimes enforcers. These roles often serve simultaneously as the embodiment of the corporate conscience and a lightning rod for gnarly ethical conversations. The most effective Risk Leaders actively participate in establishing processes, controls, training, and remediation strategies. Although execution is owned by the business operators, the risk/ethics role is charged with providing the strategy, blueprint, and assuring ongoing corporate support. Ultimately the Risk Leader must create, keep, and protect trust.
