When it comes to setting and achieving goals, power makes a difference. Those with more power are quicker to establish goals, and to take action to achieve those goals, than people with less power. To some extent, this is understandable: the powerful are less dependent on others and have greater control over outcomes. They also […]
Subject: Risk Management
How Best Behaviour Boosts the Bottom Line
Do you want your business to operate sustainable, socially and environmentally friendly practices? Almost every business leader will answer with a “yes”. But if they are allowed to elaborate, most will talk about certain conditions that have to be met: “Yes, as long as these practices do not destroy firm value”, “Yes, as long as […]
Managing Risks: Culture Matters More Than Rules
Formal risk management systems now provide the dominant logic for governing an uncertain world and are prevalent in public services as well as private firms. What happens when these systems interact with indigenous risk practices and ethics-based risk controls? Existing literature suggests that hybridization is likely — that rules-based and ethics-orientated models complement each other […]
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Motivation by Last Place Aversion
Professors Ilyana Kuziemko of Columbia Business School and Ryan Buell and Michael Norton of Harvard Business School, working with doctoral candidate Taly Reich of the Stanford Graduate School of Business, collaborated on a series of experiments to explore how far people would go to avoid being in last place. One experiment was designed to measure […]
Reporting Risk When Reporting Performance to the Board
Performance and risk are actually two sides of the same coin. Although they have traditionally been reported and managed by different organisational functions, there is a growing tendency to link them – for example, by integrating risk indicators into the company’s performance scorecard. Separate risk reporting zooms in specifically on the risk aspect of the […]
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Scenarios Planning + Early Warning Scanning = Strategic Advantage
Scenario planning (SP) and early warning scanning (EWS) are considered important to ‘managerial cognition’. They help leaders understand how the future might unfold and they alert top management to new developments and ‘issues’ – typically conceived as opportunities and threats. They help leaders understand how to reconfigure resources to match or create market change – […]
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Human Judgement Vs Computer Aided Forecasting
Robots are taking over our jobs! Ok, maybe that’s not quite the case just yet, but as technology continues to develop swiftly, there is no doubt that machines are getting smarter, cheaper, and – in some cases- more effective than humans. In several fields, analytical models are already heavily relied on for forecasting; take the […]
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CEO Connectedness Can Facilitate Fraud
‘Connected’ CEOs are those who have very close ties to the other top executives in the firm. CEOs are especially connected if they were responsible for appointing the executives to their position. Using the fraction of top executives appointed by the CEO as a proxy for connectedness, Kim and Khanna found through their research that […]
Advantages of Confidence and Dangers of Overconfidence
Executives cannot afford to ignore the dangers posed by acting overconfidently. Numerous examples in recent history can attest to this, from the inflation of the dot-com bubble in the late 1990s, to the housing boom pre-2008. Fortunately, overconfidence is not a universal problem; it is only likely to be a problem in certain situations. Identifying […]
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Don’t Let CFOs and Accountants Slow Innovation
For big corporations, regardless of industry, making disruptive changes is not a question of money: many have substantial budgets. It is a question of mind set and how you position the innovative disruption on the balance sheet – and that can be the downfall of many innovations. Giles Hilary in his paper ‘Does accounting Conservatism […]
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