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The Organizational Drag of Risk Management Must be Diminished
Jaap de Jonge, Management Consultant, Netherlands
Regulators and organizational leaders were largely , but reacted strongly after it occurred. This has led to a situation in which risk management’s operational drag in most large firms has now become too big and has to be reduced. A 2014 shows data taken from its members that only 6% of time spent by audit departments on risk types is spent on . While this category is responsible for 86% of the significant losses in market value over the last 10 years. And on the other hand, no less than 52% of time is spent on financial, legal and compliance issues, while such issues only account for 5% of all significant market value losses.
The conclusion is that nowadays risk departments are looking for risks in all the wrong places. In reaction to market turmoil, companies have been increasing their and risk management budgets. But an excessive or even exclusive focus on risk prevention and formalized risk management processes has created an unintended consequence referred to as “Organizational (...) Read more? Sign up for free
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