Thursday, February 24, 2011

The gap of uncertainty

Drs. Deddy Jacobus, CCSA
Senior Partner – JPM & Partners/Risk Workshop International

• How do you manage risks: based on skill or luck?

• Peter L. Bernstein “The revolutionary idea that defines the boundary between modern times and the past is the mastery of risk” (Against the gods, the remarkable story of risk.)

Managerial challenges: Addressing the Uncertainty
The world is ever changing even at an unconceivable speed and this has caused a widening gap as far as our organizational capacity to response is concern. This gap in its turn creates uncertainties for most organizations.

An organization capacity to reduce the uncertainty relates to its risk management. Poor risk management means incapable to effectively response to changes and uncertainties.

Indicators of poor risk management:
• Bad corporate governance
• Inconsistent corporate culture
• Instable performance
• Silo approach to risk management
• Low investors confidence

Lessons learnt from the bad fortunes:
• Barings Bank (1995): bad corporate governance and inconsistent corporate culture
• Enron Corp (2001): bad corporate governance and instable performance
• Lehman Brothers (2008): inconsistent corporate culture and silo approach to risk management