Directors urged to take on 'risk' role
A leading risk management partner urged all company directors to wrestle back the control of risk management from FDs.
‘It’s pretty difficult to get risk management away from the finance director, it’s a great shame. It’s hard to get chief executives to own the process,’ said Tarlock Teji, partner at Deloitte & Touche’s enterprise risk services.
Ego greed and fear are holding back management from developing the value of their company Teji warned. And, he added, fast-growing companies in particular are still not managing risk because the board does not view it as a priority.
Speaking at the ICAEW’s annual conference in London, Teji said that the dramatic shift in economic drivers meant that companies were missing out on opportunities and taking unnecessary risks.
‘The problem is that people’s judgement gets clouded by ego, greed and fear, and that stops them making rational decisions. I’d like to see them using some form of analysis that validates their judgement.’
He suggested finding a framework, using it consistently and keeping it simple as some of the best ways to ensure a company’s success.
Results of a Deloitte’s survey of the larger FTSE companies, due to be released, showed that 38% of financial controllers viewed risk management as merely a disclosure issue or an unnecessary drain.
Teji warned that investors will increasingly ask about risk management strategies and that legislation and mandatory requirements were being enacted throughout the world.
‘People think they’ve done it, but they haven’t. A lot of chief executives are talking a good game, but when you scratch under the surface, you’ll find very few who have truly embedded risk management into the culture of their organisation,’ said Teji.