In the last 12-18 months, in the lead up to the introduction of the Senior Managers and Certification Regime one of the most talked about topics has been individual accountability. Creating clarity of accountabilities is critical for the success of any organisation. In light of the SMR and an industry-wide focus on individual accountability, I Read More
So, Kevin Pietersen is not wanted by English Cricket – remarkable. Leaving aside the cricketing merits of Pietersen, I wonder how many firms out there would make the same decision and, if so, what that tells us about the value of the ‘right culture’. One of the disciplines within the Risk-Based Performance Management methodology is Read More
Dear Reader, In the soon to be released, Risk-Based Performance Management book, we make the statement that culture is perhaps the ultimate strategy and risk management tool: if you get the culture right, then your objectives will more likely be achieved and risk managed. Get the culture wrong and failure will be just about inevitable. Read More
Risk-Based Performance Management (RPBM) is a strategy execution and risk management methodology which is designed to enable organisations to drive sustainable strategic execution while ‘operating within appetite’. Core to RPBM is the understanding of ‘risk appetite’: that is the amount of risk that the organization is willing to, or is required to take in the Read More
Ok it is the answer if you are a politician trying to capture popular appeal.
But to ‘fix’ the current credit crisis, Mr Obama and Mr Brown (who has the bigger job of saving the world!), this is not the answer.
Setting a arbitrary level of salary and bonus payment, unrelated to market forces, will not help overcome the problems the industry faces. Right now the industry needs to retain and attract the best and brightest not discourage them.
In the wake of one of the most turbulent periods in the history of the financial services industry many politicians, regulators and members of the public have cited the prevailing bonus culture, in particular, excessive bonus as the root of all evil. This feeling is such that as governments around the world have nationalised banks, they have also explicitly sought to control bonus structures and payments. However, we believe this is an oversimplification of the issue which in many cases is designed to make headlines rather than add sensibly to the debate. The bonus culture, both in the City and on Wall Street, is not the real problem. The real issue is a pervading bonus culture which is focused on ‘A players’ rather than on a balanced set of ‘A positions’
One of the most challenging aspects of implementing corporate performance management or risk management projects is how to embed these philosophies into the daily culture of your organisation.
Outlined below are a couple of examples of how the Risk-based performance approach can help embed corporate performance and risk management philosophies into your organisation – a topic we will return to often on this site. Here we look at issues relating to silo processes and internal control certification.
One of the questions that we are often asked is “Does Risk-based performance help us build ‘the right’ culture? If so, how?”
The development of the right organisational culture is one of the key benefits that the Risk-based performance methodology brings and is central to its design. One of the specific aspects of the methodology – the interaction between the Strategy map and Risk map – plays a critical role in setting the tone and encouraging the development of the ‘right’ culture.