A recent Harvard Business Review Analytic Services study of companies with more than 10,000 employees found that only 1 in 10 respondents said their executive management was “highly effective” at creating a “strong risk-aware culture”.
Barely one-third of all respondents felt they were doing well at any of the key risk management capabilities most often cited as critical to organizational performance, such as linking risk information to strategic decision-making, driving risk mitigation activities, proactively identifying current and emerging risks, and so on.
In follow-up interviews with executives, the Harvard researchers nevertheless found broad agreement concerning the important benefits of enterprise risk management (ERM) and the various “lessons” companies must take on board in this regard:
- Risk management needs to have a clear “owner” to be effective.
- Risk management and corporate goals need to be integrated.
- Companies must manage risk proactively.
- Companies must look deeper and wider to determine what their most serious risks will be in the long run.
- Companies must break down silos and bottlenecks.
Aggregating these ERM “lessons” with the concept of an Integrated Trade Compliance Strategy, we suggest five core principles for boards to consider when addressing the increased demands of globalization: Awareness; Alignment; Accountability; Assessment; and Adaptability.
Other posts in this series:
- International Trade Compliance & Risk Management Case Studies
- The Need for Informed Vigilance
- The Intersection of Globalization and Corporate Leadership
- Corporate Leadership & Compliance: The Board of Directors’ Role (Part II)
- Corporate Leadership & Compliance: The Board of Directors’ Role (Part I)
- The Role of Corporate Leadership in Achieving Compliance Success
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