1) “…managing risk is as much about judgment as about numbers.” Quote from The gods strike back: A special report on financial risk in The Economist February 13, 2010. Discuss how an organization should bring judgment into its Enterprise Risk Management process. At what level in the organization should judgment be exercised?
2) “Besides, there is more to establishing a solid risk culture than empowering risk officers. Culture is a slippery concept, but it matters. ‘Whatever causes the next crisis, it will be different, so you need something that can deal with the unexpected. That’s culture,’ says Colm Kelleher of Morgan Stanley.” Quote from The gods strike back: A special report on financial risk in The Economist February 13, 2010. Discuss how and where “culture” should fit into the Enterprise Risk Management process.
3) “Rare big changes can be more significant than the sum of many small changes.” Quote attributed to Benoit Mandelbrot in The gods strike back: A special report on financial risk in The Economist February 13, 2010. Which type of change should be the focus of the Risk Identification and Evaluation process?
4) “The term ‘mastering uncertainty’ is a dangerous one. It can lead managers to think that they can analyse their way through the fog or control the environment in which they operate. This points efforts in the wrong direction, as what should be mastered instead is the ability to respond.” Quote taken from “Can we really ‘master’ uncertainty?” by Jean-Louis Barsoux and Preston Bottger in the Financial Times Series Mastering Uncertainty: Part 1: Seeking shelter from the storm March 17, 2006….Should the objective of the ERM process be on “mastering uncertainty” or on “the ability to respond”?
5) “There are four distinct types of conversations:
•Conversations to make sense should identify patterns in complex, incomplete, conflicting or ambiguous data
•Conversations to make choices among competing opportunities and threats should result in a small set of clear priorities to focus resources and attention
•Conversations to make it happen should solicit personal commitments to actions aligned with agreed priorities
•Conversations to make revisions treat market moves as experiments, analyse the findings and use these lessons to revise assumptions, priorities and commitments.”
Quote taken from “More than idle chatter” by Donald Sull and Ben Bryant in the Financial Times Series Mastering Uncertainty: Part 4: The search for common meaning April7, 2006. Discuss where in the ERM process each type of conversation is most relevant. What should be the balance between formal and informal conversations in the ERM process?
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