Financial Institutions do not take Risk Management seriously

I just read an interesting article in the Business Report which stated that the global financial crisis is largely the result of financial institutions not taking risk management seriously.

The article contained a number of interesting pointers and is based on a KPMG survey on risk management in banks which was released on Monday.

See http://tinyurl.com/aqqaxg

The article states that risk management was just a support function and an interesting finding was that though risk management programmes exist, there were shortcomings in their approach.

This correlates with my experience in teaching understanding about reputation risk. Worldwide reputation risk is seen as the one risk that is the most difficult to define and manage. Therefore it is often left to chance and dealt with post event.

It just goes to show that if there are problems existing with traditional risk programmes, then reputation risk is even less understood and managed.

In my master class workshops I show the audience three ways to define reputation risk. It is only then that the reality dawns on them, how to mitigate it.

(If you are interested in learning more about Reputation Risk, and whether it is a strategic risk on its own or just a consequence of a risk, register for my next Reputation Risk Management Master Class).

Do you still trust a Lift?

I read an interesting article today about how on Monday, 13 people were trapped in one of the courts lifts (elevator) at the Johannesburg High court.

When the group were rescued, three people had passed out – two from the heat and one after suffering an asthma attack. A Few weeks ago the same thing happened at Johannesburg Hospital (now called the Charlotte Maxeke Hospital)

This poses some debatable questions. How can we put our trust in the courts, if we cannot trust the building in which it is housed?

Levels of maintenance creates perceptions, sometimes unwanted.

It also raises questions about risk appetite. The other day I was in a lift in a building,going from the 13th floor to the bottom. On our disembarkment, I asked the CFO about whether the company had a policy stating that key executives should not travel in the same plane or car together.

He stated affirmative, upon which I said: ”But we all got in the same lift together” – there were three of us.

Last year, the Department of Labour conducted spot-checks on lifts in Durban, discovering that in more than 55% of cases, they were not adequately serviced.

Now, some will say, that lift accidents do not happen often…the probability is low. Sure, but the organisation’s reputation is still tarnished.

Customers experiences in a lift creates anticipation for future assocations with the institution.  The mere fact that I read about the level of maintenance, says clearly that the reputation of the institution is being affected.

And that, can take longer to repair, than some maintenance schedule.

(For those interested to find out how an elevator works, go to http://science.howstuffworks.com/elevator.htm)