In episode 11 of the TrustTalk podcast, we interview two partners of the international accounting and consulting firm EY, Tonny Dekker and Will Weerts on Enterprise Risk. Although Enterprise risk is a fairly broad area, being an expert in this does not mean you know or understand all risks a company could face. Rather both partners consider themselves generalists. Due to their advisory history, they have a lot of knowledge about the way to address risks in an enterprise (being all sorts of organizations, even governments). Risk management is making choices about which risk you are willing to take and building your strategy on that. “Ther is more value money destroyed with poor strategic decisions and poor strategy execution than all the accounting scandals.
In the interview they talk about the risk surrounding KODAK’s failure to maintain their photography technology lead, Apple’s choice to launch the iPad where many believed that would be wrong, and the corporate failures of WorldCom and Nortel at the beginning of the 21st century. The “Six Factors” of risk management are discussed as defined by Loizos Heracleous of Warwick Business School and Katrin Werres, a senior industry analyst at Google as examples of poor risk management strategy, being overly aggressive or showing poor leadership.
They discuss the role of a Chief Risk Officer, the Three Lines of Defence, and the “Catch-22” situation many managers find themselves in. Other subjects that are part of the interview, the challenges of the corona-pandemic risks and IP (Intellectual Property) risks, internal audit function and enterprise risk.
In the interview both EY partners refer to the “Kaplan Model“, named after the Harvard professor who published a risk classification that talks about upside risks, risks and opportunity risks, outside risk, so risk coming from outside the organization which you cannot control, but which you need and want to deal with, and downside risk, so risks that you can manage and monitor yourself.
Listen to the interview on the TrustTalk podcast. The transcript of the interview can be found here:
Her you can also download the PDF with the transcript.
Further reading on the Kaplan Model: “Managing Risks: A New Framework“, by Robert S. Kaplan and Anette Mikes (Harvard Business Review).
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All podcasts are being audio- edited by Job Dijk of Steigerstudios in Veenendaal, The Netherlands