New Game Changers or Roads to Ruin - Now will industry change direction?

Recently, eighteen high profile corporate crises or major risk events of the last decade and their origins, impact & implications have been analysed.¹ 

Seven underlying types of risks are integral to the ethos, safety, reputation and longevity of a business and its ability to use its own information effectively. They are seldom discussed within companies or in the literature on risk analysis. Many are virtually taboo internally, because they touch on the behaviour, decisions, performance and perceptions of the senior echelons of the company.

The important lessons are related to the need for boards, particularly non-executive directors [NEDs], to be more effective in their approach to risk management, seek full information and ask challenging questions about the underlying risks that have been identified. Risk managers and internal auditors will feel uncomfortable working in the areas highlighted in this report until they have been able to gain the skills and experience necessary effectively to question and discuss both corporate strategy and the leadership style of senior management. Many of these risk areas are difficult for risk professionals to explore or report on, due to the need to question and sometimes criticise those above them in the hierarchy. Four important developments are necessary if boards are to effectively address these important risk issues.

Many of the risks highlighted are inherent in every organisation. Unrecognised and unmanaged, these underlying risks pose a potentially lethal threat to the future of even the largest and most successful businesses. Boards, particularly chairmen and NEDs, have a large, important blind spot in this dangerous area. Without board leadership, these risks will remain hidden because only boards can ensure that enough light shines on these hard to see risks.

This paper is a critique of the relevant global game changers that our industry must fully comprehend and where necessary change direction before it's too late.²  Recent events since this report was published in July 2011, would indicate otherwise e.g. Brazil seeks $22 billion from Chevron and Transocean in oil spill and Elgin gas leak in North Sea could cost Total £4.8bn^{3, 4}