ABSTRACT
Creating a Risk Management Framework One of the challenges corporate management and country risk analysts face in crafting a methodology that will gain wide acceptance in an organization is a tendency for existing risk management practices and biases to inhibit development of a tool that does not reproduce the defects inherent in the system. Among the most common impediments are:
• A breakdown in communication between analysts, risk management, and senior management
• Unresolved conflicts between staff and management • A tendency to overlook or ignore defects or problems • Killing the messenger instead of rewarding the messenger • Covering up mistakes • Screening information, then denying there is a problem • A lack of incentives to find and correct a problem
• A tendency to accept the most popular or favorable point of view-one that will not rock the boat
• Lack of flexibility and innovation • Loss of institutional memory
Any tools that are adopted or systems that are put in place must be simple and easy to use, so as to encourage their broad acceptance and avoid encouraging or exacerbating these common pitfalls.
