Huge Corporate Risks Exposed
Added: (Thu Mar 28 2002)
Pressbox (Press Release) -
Business Confidence Management is a new technique for identifying risks that are hinder progress to corporate goals. In non-threatening interviews, senior line managers say how confident they that business targets will be met. Where confidence is lowest, risks are identified and corrective action taken. It has been readily accepted in corporate and government organisations, where improved teamwork has reduced levels of risk.
HOW TO EXPOSE HIDDEN RISK
Companies now have a new technique for identifying risks. Instead of asking managers directly about risk, a negative experience, a Surrey consultancy asks about confidence in achieving results, a positive approach. Lack of confidence is translated into risk.
Recent high profile events have served to expose errors of judgement of both executive and non-executive directors, senior management and external professional advisors. How is it that external auditors did not, or could not, highlight huge risks that were self-evident to many responsible managers within an organisation? Why have many board members been so misled?
Directors are responsible to many stakeholders in a company: staff, shareholders, bankers, suppliers, customers and government. They should be aware of any major threats to a company’s viability and veracity of information given to stakeholders. They depend on information collated by layers of management, who naturally prefer to report good news. Problems with operations, projects and finances may not be reported objectively. “Bottom-up” information flow is filtered to give a better impression to higher levels of management.
Business Confidence Management rapidly analyses the confidence of staff in meeting agreed targets, key performance indicators and management objectives. Accountable managers are surveyed on their “feeling of confidence” about achieving targets. This works well when there are cross-functional responsibilities for delivering a particular target. The answers may expose unidentified high impact risks (potentially losing £ millions).
Results are anonymous, without attribution to individuals. This generally elicits frank responses from interviewees, creating an opportunity to raise unspoken concerns. Confidence bar charts highlight areas of low confidence, which are then translated into risk. A brief report comments on where further action is needed and managers can work together better to reduce risk. The process is repeated quarterly to track confidence over time.
Business Confidence Management has been successfully implemented in a number of large organisations. It has highlighted areas of low confidence and promoted more balanced corporate reporting. The formal reports of executive directors have been tempered the unfettered opinions of line managers.
More details of this novel method of supporting directors can be seen by browsing the website www.logicterm.co.uk.
Dr Leonard P Anderson
Logicterm Limited, Russet Lodge, Hockering Road, Woking, GU22 7HG
Tel 01483 77 1239