Risk management results

Some interesting trends and global findings emerged from an Ernst & Young survey.

In the 2006 Ernst & Young survey, companies perceived a rising level of risk and planned to increase their investment in risk management over the following three years, but a lack of alignment with the strategy of their business meant many were not getting the full benefits from their risk approach.

The findings suggested that general managers do not always have a full understanding of the risk challenges in functional areas, such as tax and technology, and that greater communication is needed between senior executives and functional leaders. Only two-thirds of the senior executives questioned said that tax, technology, competitive and pricing risk are included in a formal risk assessment process.

Other key findings included:

  •  Risk management challenges over the following three to five years included a more integrated and systematic approach, clarifying ownership, and embedding a risk culture in the organisation;
  •  Risk management processes had positively affected working relationships by a factor of 6:1, leading to increased effectiveness in decision-making and communications, and better alignment of effort; and
  •  Key areas for successful risk management were clear ownership of risk (77%), understanding throughout the organisation (76%), and internal mechanisms to communicate on risk (71%).

In the 2007 Ernst & Young survey, senior executives are responding to increased levels of risk with higher levels of investment. But a new survey from Ernst & Young reveals more needs to be done to extract the full value of this investment.

Companies perceive a rising level of risk and plan to increase their investment in risk management over the next three years. The challenge is to focus that increased investment where it will add most value. However, further alignment with business strategy will help companies to get the full benefits of their risk approach.

Key findings were:

  •  Nearly four in ten companies do not have formal processes to align risk management with corporate strategy. This finding, more than any other emerging from our survey, suggests that companies still have some distance to go to gain full value from their risk management approach;
  •  Further alignment is needed between risk management functions and line management, as well as across individual functions. The findings suggested again that general managers do not always have a full understanding of the risk challenges in functional areas, (for example, tax and technology) and that more communication is required;
  •  There is definite room for improvement in risk coverage and formalisation. Forty-two per cent of our respondents admit there are gaps in their risk coverage; and
  •  Investment in risk management will rise: 66% of companies plan to increase their investment over the next three years.

The 2007 US Risk Barometer study by Protiviti, which surveyed 150 senior-level executives, found that competitor risk is viewed as the top risk to these organisations. Competitor risk along with customer satisfaction, the regulatory environment, information systems and IT security, and changing markets make up the top five risks as determined by the study. Compare this to the previous editorial whereby we discussed the top risks identified in the Aon’s 2007 Global Risk Management Survey.

They were: damage to reputation, business interruption and third party liability, supply chain failure and market environment.

While competitor risk ranked highest overall, the Risk Barometer study found the top risk varied by industry groupings:

  •  Manufacturing, distribution and technology – competitor;
  •  Financial services and real estate – financial markets;
  •  Healthcare and life sciences – regulatory environment;
  •  Media, hospitality and services – customer satisfaction;
  •  Consumer products and retail – competitor; and
  •  Energy and utilities – regulatory environment.

Survey results show executives’ appreciation of the potential organisational impact of better risk management. In the 2006 US Risk Barometer study, lower insurance premiums were the top-ranked benefit of risk management. In 2007, however, “quicker identification of risk” was the most oft-cited benefit, followed closely by “better risk information and measures,” and “improvements in process performance.”

The human element fraud

Fraud remains an underestimated risk. The consequences of fraud and all related unethical behaviour, including bribery and corruption, can be devastating to a company.

The cost of fraud can be significant. If reduced only marginally, the programme for fraud risk control can be seen to deliver a positive cost/benefit for all stakeholders. It was stated in the Fraud Risk Mitigation survey that fraud risk management should be seen as a saving or investment, rather than a cost.

The survey reports that employees in Europe find their employers’ anti-fraud policies lacking. Many fear reprisals, and the overall findings show personnel see a disconnect between the perceived and real procedures on reporting improprieties.

Although all US -listed companies and their subsidiaries are required to have an anonymous whistleblower hotline for employees and third parties to report unethical behaviour, these hotlines are far less common in Europe. Only 38 percent of European respondents say their company has a hotline, while a little more than half of total respondents say they believe people actually use hotlines.

One in five respondents said people at their companies are afraid to speak up. More than 80 percent cite fear of reprisal as the reason they won’t come forward.

The differences as to the reason why an employee would call or not call had to do with the culture, legislation and regulation in each country.

Overall, 42 percent of respondents’ companies do not have any formal anti-fraud policies or procedures in place. However, most employees surveyed say they would rather work in an organisation that has a definite set of guidelines to help them make the best choice when faced with a difficult situation. The report concluded that some of the best practices in managing business fraud and unethical behaviour are establishing a unilateral code of conduct, training and awareness, and a trusted means of communication such as a hotline. A specific chain of reporting is also a key factor in increasing employee confidence in the organisation’s anti-fraud efforts.

Peter Smanjak is the CEO of Infinite Risk (www.infiniterisk.com) which operates in the corporate market on strategic and operational aspects of all risk related and health care programmes.

This article appeared in the December 2015 issue of HR Future magazine.

What does Oscar know now that he didn’t know then?

The story of our home-grown modern Shakespearian tragedy figure, Oscar Pistorius, has once more provided more lessons which we would all do well to learn. Having now been found guilty of murder, he faces having to pay a lot more for his crime.

When he was originally found guilty of culpable homicide, he probably had a range of emotions that dominated his psyche. Regret was probably high up on the list, but the overwhelming emotion was probably that of relief – that he had got away with murder.

The relief has now long since been overtaken by the dominating emotion of regret. How many times must he not have thought, “If only I knew then what I know now – ” If he had known what anger, arrogance and pride can lead to, he would never have fired that weapon. He will, for the rest of his life, regret giving in, probably for a matter of minutes, to the anger, pride and arrogance that caused him to fire four shots through a locked toilet door, killing his girlfriend Reeva Steenkamp.

He probably now knows that for every action there is a consequence – a lesson he had probably never been taught, by parents who understandably but mistakenly tried to overcompensate for his disability.

The story is, as described in the recent judgement by the Supreme Court of Appeal, a human tragedy of Shakespearian proportions. That is not a throw away comment but a very astute one. A Shakespearian tragedy is a story in which the noble protagonist (main character) who has much potential and many good points is put in a stressful situation and, because of one fatal flaw, acts in a way that results in a fatal conclusion.

It is a very sobering experience to see how closely life has imitated art. He had so much potential – to use his talents to do good – change the world for the better. Instead, his flawed actions have resulted in a fatal conclusion.

What he knows now will follow him and haunt him for the rest of his life.

But the question we need to ask ourselves is: what do we know now that we didn’t know “then” – at the beginning of this year, for example? Have you learnt anything of value this year?

If not, it has been a waste and you are doomed to repeat the mistakes you made this year until you learn the lessons life brought across your path.

As we draw to the end of another year, you may have a sense of regret about something you failed to achieve this year. It’s been a tough year and we’ve all had to face challenges we would rather not have faced.

With hindsight being an exact science, we can easily see what we should have done or not done when we look back. But living forwards is not as easy. We’re really not as good at that!

Don’t be too hard on yourself, therefore, and waste the next few weeks focusing on regrets that are not worthy of your attention. Rather use your energy to minimize the possibility of regret at the end of the next year.

The way to do that is to recognise that everything you do or say has consequences – either pleasant consequences (ones that benefit you) or unpleasant consequences (ones that hinder or obstruct you). Before you act or speak, consider the possible consequences, then act in accordance with the consequences you desire.

Alan Hosking is the publisher of HR Future magazine, www.hrfuture.net, @HRFuturemag, and assists leaders to achieve self-mastery using IQ, EQ, PQ and SQ.

How to eliminate back to work stress

There are a few small things that can be done so as not to let anxieties about returning to work or school spoil a chunk of a holiday. While thoughts of returning to duty are effectively banished from one’s mind during the initial stages of leave or recess, as the new year comes closer many people’s minds will be jolted back to the looming reality which can detract from what should be a happy, carefree time.

Thoughts of returning to the office can cause feelings of anxiety, dread and even depression, but by taking a few small empowering actions now and during the holidays, going back can be considerably less stressful.

As the saying goes: “If you haven’t started planning for the next year, you are already behind. So now is the time to tie up all the loose ends and get a plan in motion that will see you enter the new year with no remnants from the previous year sapping your energy, and with a vision for growth that will excite and inspire you throughout your break”.

In recent years, a UK survey among 2500 people conducted by the Institute of Leadership and Management, showed that for many people, going on holiday actually increased their stress.

Many South Africans would be in the same boat, but that positively making the transition between the old year and new.

To make the most of one’s holidays, one should:

Tie up loose ends

Make sure that all the jobs, tasks and projects scheduled for this year are done and dusted before you leave for the holidays.
Make a to-do list for the remaining worktime in this year and take satisfaction in ticking off one after the next task. Clear your inbox and remember to set up an out-of-office reminder on your last day.

Plan for a digital hiatus

Ensure that people know where to reach you in case of an emergency, but resolve to stay away from “just quickly checking in” at work, or spending most of your days on social media.

Give your brain a real chance to shut off and rest. You will find that when you give your mind this kind of space, all kinds of new ideas and visions for the future will find their way into the space which used to be filled with status updates and online rage.

Have something meaningful to look forward to

Knowing that once your break is over you will be returning to another year of more of the same – and even more of the same – can be a real downer.

For human beings to grow and become more self-actualised, each year must allow new opportunity for growth. During your time off, take stock of your direction. Are you doing what you love? Is there something else you would like to explore? Perhaps you can start exploring that by joining a short course or signing up for a programme? Taking a step in the direction you want to be going, however small, will put a new spring in your step.

Start doing something new during your break

Whether it be starting to train for your first 5K run, starting a blog, or learning a new language, doing something fun and constructive will immediately get you energised and inspired.

The trick is to not while away your precious days with eating, partying and sleeping day after day. While there is certainly space for that, a confidence-building activity and a vision for the future will do much more to restore your mind and body, and help you start the new year in the way you would like it to end – on a high note.

Dr Felicity Coughlan is the Director of The Independent Institute of Education.

Why employee appreciation is essential

As the end of the year draws closer, business owners should be thinking about acknowledging their staff for contributing to the company’s success. While there are those who think that a pay cheque should be sufficient thanks, a study by online career site Glassdoor revealed that more than 80% of employees say they feel motivated to work harder when they feel appreciated for their work.

What’s more, 55% of workers say they would leave their current jobs for a company that clearly recognises its employee efforts and contributions, according to a Globoforce Mood Tracker Report. These are particularly important points to consider when aiming to retain top talent going into the New Year.

Appreciation is a fundamental human need. Employees respond to appreciation expressed through recognition of their good work because it confirms that their work is valued. When employees – and their work – are valued, their satisfaction and productivity rises. This ultimately has a direct impact on a company’s bottom line.

An analysis by The Gallup Organisation also found that individuals who receive regular recognition and praise are more productive, more engaging with their colleagues, receive higher loyalty and satisfaction scores from customers, have better safety records and are involved in fewer accidents on the job.

The way in which you recognise your employees requires some thought. While a study by the International Association of Administrative Professionals and OfficeTeam found that contrary to the perceptions of managers who ranked promotions and cash bonuses as the two most effective ways of recognising employee accomplishments, workers said they preferred an in-person thank-you or having a job well done reported to senior management.

Recognising your employees should take place more frequently than just at the end of the year. As one of the top business leaders in the world, Sir Richard Branson, once said, ‘I truly believe that if you take care of your employees, they will take care of your business’.

Kay Vittee is the CEO of Quest Staffing Solutions.

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