Wednesday, February 17, 2010

Ethics and Risk Management

It is my contention, as I have often said, that Corporate Ethics is one of four key attributes of Risk Management, and that is is often in tension with a performance culture (another of my four key attributes).

A number of things have cropped up over the recent years:
  • Clearly Toyota has some "ethical" questions to answer with regard to brakes, accelarators and now steering systems.
  • It seems unutterbaly proven that there were dubious (at best) ethics in banking which allowed the situation to arise for the financial crisis.
  • A few politicians in the UK have exhibited less than the highest standards in the ethical field.
  • Greece (aided and abetted by at least one bank) appears to have been cooking the books, with disastrous consequences for other Eurozone countries.
  • BAe has paid a stinging penalty to the US and a modest one in the UK.
  • We have a new bribery act coming onto the statute book in the UK (if it gets through before the election).

I believe that risk management can ONLY work where there is an ethical dimension to the organisation. And yet, perversely, this allows free-riding unethical corporations to duck and weave unhindered and leave the ethical corporation trailing - at least for a period of time.

I would welcome people's views on the interaction of ethics and risk management.

As ever, I am likely to turn the discussion into a paper in due course, summarising the contributions - if you are uncomfortable with that, let me know in your response.



1 comment:

Richard Anderson said...

I wonder whether the Greek story playing out at Goldman Sachs is a good example as to where ethics might have come into play: In other words, would an "ethical" view have made them think more about the transaction rather than saying "it was in the rules"?