Risk Managers – Tone Down That Report!

This week three renowned figures – Angelina Jolie, Larry Page and Christine Quinn – disclosed their medical problems to the world. They discussed battle with breast cancer, paralysis of vocal cords, and struggles with bulimia and alcoholism. Jolie, a woman famous for her beauty bared her mastectomy details. They talked about fear of death and handicap, and frailty of human character. They risked high-profile careers by being candid. One word describes their actions – Courage.

However, the corporate world wants to hide behind lies and window dress their weaknesses. The corporate leaders sometimes threaten risk managers and auditors to tone down their reports. The messengers of bad news get shot. Risk managers face bullying, retaliation and threat to their jobs for showing courage to speak the truth. If they refuse to bow down to pressure, the business teams label them as politically dumb or difficult to deal with. Question is – should risk managers tone down their reports to please the business teams?

I want to discuss a couple of scenarios here and you decide the course of action.

Scenario 1- Don’t report correct facts to avoid giving bad news

Let us say, you are a CXO of an organization. You have a heart problem and visit a doctor who is a good friend of yours.

The doctor realizes your heart condition is bad. You require a heart surgery for four bypasses. The doctor doesn’t want to deliver the bad news to you, because he doesn’t wish to hurt your feelings.

The doctor tells you  – “You just have too much stress. You need a vacation to relax and have some fun.” He prescribes you some vitamins and discharges you.

You follow your doctor’s advice, take a vacation. You swim and jog for a couple of days and have a heart attack. You arrive at the hospital with a survival chance of 5%.

Did the doctor do the right thing by not telling you the truth?

Scenario 2 : Don’t report correctly to protect a friend

A civil engineer responsible for doing quality and inspection checks of a bridge notices that sub-standard quality of material is used. There is a high risk of bridge collapsing. However, he issues a clean report to his seniors because the engineer-in-charge of the bridge is a friend of his.

An organisation’s senior managers drive daily across the bridge to reach their office. One day all of them are on the bridge and it collapses. All die.

Would the families of the senior managers be happy with the quality control engineer’s for not disclosing the risks?

My guess is most of the corporate readers would have answered no. You would have preferred the truth when it is a question of your own life being at risk.

Corporate Scenario

So why don’t corporate citizens hesitate when they put other people’s life at risk. See the Bangladesh factory fire, Japan’s nuclear disaster or US banks home foreclosure and mortgage mess. Employees, customers and public lives or life savings were put at risk.

Wouldn’t a few honest risk management reports helped in fixing the problem in time to prevent the disasters?

The corporate world maintains double standards on reporting risks. They want full disclosure of the risks to them but not to others. Before setting these expectations, corporate citizens should answer these questions:

1) Isn’t it a risk manager’s job to identify the health problems of the organization, prescribe a cure, suggest amputation where required and nurse the organization back to health?

2) Is it right to compromise professional ethics and code of conduct to keep a few people happy?

3) Aren’t risk managers responsible for calculating the direct and indirect cost to others for non-disclosure of risks?

4) Shouldn’t risk managers hold their ground and stick to their independent advise as you will benefit from it in the long-run?

Closing Thoughts

Moral courage is one of the most difficult qualities to acquire. Larry Page, as CEO of Google fulfilled his responsibility to the investors by publicly disclosing his medical problems. Now the investors can make an informed decision. One has to admire Page for taking such a difficult call. It takes guts. Disclosing personal weakness makes one feel vulnerable, exposed and fallible. He has shown the path for corporate leaders to follow.

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4 comments on “Risk Managers – Tone Down That Report!

  1. Sonja, excellent thoughts!

    More people should stand up and tell what they really mean and waht they really see and not duck and dive. If you want people to trust you, one needs to be able to tell the truth even if this truth is a message people do not want to hear.
    My impression is that companies believe that society (who ever that is) does not want to hear bad news as it will hurt their reputation, though they mistake this by hiding the bad stuff. Properly showing what goes wrong and showing the actions taken will show much more courage, determination and taken the people serious.

    • Thanks Marcel, and you are so right. Unfortunately, some of our corporate leaders are obsessed with power. Power without consideration of others results in reduction of personal values. Hence, they cannot even perceive moral courage. As Gandhi said – If you are saying yes to avoid getting into trouble, rather than taking the right decision, you lack moral courage.

      Corporate leaders believe lack of moral courage isn’t a big deal. But without being able to inspire others, how in the hell will they get followers.

      Another aspect which they believe is risk managers should give the required report because after losing their job, they won’t have money to survive. So basically they are paying for the desired report. If money should be driving force, then what will they do if I reverse the scenario. Let us say, a CXO was just suffering exhaustion. But the doctor wouldn’t have earned much money from it, he would make more from a heart surgery. So he operates just to make money. Will the CXO be happy about it.

      They want a risk manager to compromise his/her ethics but the doctor shouldn’t. Everything in the world is interconnected. One can’t separate and put different aspects in neat little compartments, where one gets only the good part. But delusions has made the world go round.

      Sonia

  2. Sonia,

    I completely and vehemently disagree with you to the extent that it makes me sick.

    I have been a CXO, including a CRO. Leaders DO NOT lack moral courage. It is easy to use to some failures to make a statement, including taking Mahatma Gandhi’s words out of context. He said, and I quote “You have to do the right thing… You may never know what results come from your action. But if you do nothing, there will be no result.” There is no statement about moral courage here.

    Yes one doctor didn’t tell the information. But what about what about the doctors who told Angeline Jolie of her Cancer probabilities, allowing her to make the decision based on that knowledge. One doctor does not represent the entire profession.

    Taking one doctor and using the hypothetical scenario is extremely dangerous, especially about moral courage. Same goes with CROs.

    I have been a CXO myself and have advised CXOs at Fortune 100 companies. NO ONE BELIEVES THAT “Corporate leaders believe lack of moral courage isn’t a big deal” .If you are going to make such comments which is an insult to the rest of CXOs, please provide a balanced view.

    In the Fukushima incident, TEPCO was trying to assess the damage which was increasing by the minute. They didn’t know what to report. It may have come across as hiding the incident, but it wasn’t. Moreover, the CEO of TEPCO resigned of his own accord due to the shame he felt — is that lack of moral courage?

    About the mortgage crisis, the fault also includes the borrowers by borrowing huge sums of money to buy houses they could not afford. The banks had to deal with these defaults. I am not saying that what was is happening is not wrong, but give a balanced view. Also as a result, senior management was held responsible and changed accordingly.

    Please do not write such inflammatory and unbalanced comments in the future. I understand you can write whatever you want to, but you may fall into that doctor scenario you have mentioned.

    • Nainish,

      Thanks for the sharing your views. I wanted to know which company were you working. I tired to find out on Linkedin to connect with you, but there was no one with the same same and job roles.Your facebook page also doesn’t give any details. it doesn’t even have a photograph. I changed my setting yesterday for the comments section to ensure everyone log ins that correct people are writing instead of trolls. Seems like one person has been commenting under different names. So kind of confused.

      Eitherways, let me conuteract your points for the sake of discussion:

      Mahatma Gandhi’s quote exact words : A ‘No’ uttered from the deepest conviction is better than a ‘Yes’ merely uttered to please, or worse, to avoid trouble.”. He was talking in reference to courage, that people say yes because they aren’t brave enough to say no.

      Your second point: Examples and scenarios are to illustrate, they don’t cause riots. My readers are educated professionals and most of them are risk managers except a few CXOs’ Risk managers are quite balanced from my experience and don’t jump to conclusions.

      “Corporate leaders believe lack of moral courage isn’t a big deal” .If you are going to make such comments which is an insult to the rest of CXOs, please provide a balanced view. _ thank you for pointing it out, that moral courage is a big deal for everyone. Without moral courage people will view leaders not as heroes but villains.

      Please read the report of Japan’s Investigation Agency on TEPCO. It clearly stated that the management did not disclose the full risks, they knew about quite a few and delayed disclosure. Even earlier on the inspection reports recommendations were not adequately implemented.

      On the mortgage and foreclosure problem – the banks should have checked the the repayment capacity of the borrower, it is their job. If I come and ask you for RS 100 crores will you give it to me without checking my repayment capacity? Secondly, the banks did not follow proper processes for property identification and loan repayment. They foreclosed properties of people who had repaid. This is a complete lack of respect of their customers.

      If you are having a bad weekend it is okay. Some days one just can’t take the issues and everything becomes a big deal.

      Sonia

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