Business Summit: Enterprise Risk Management
Risk management is a key to sustained firm growth, says professor Robert S. Kaplan. Key ingredients to a successful risk management program include the proper culture, clear parameters, discipline, measurement, and accountability.
Editor's Note: This is a summary of an HBS Business Summit presentation. View a full summary and video of the event on the HBS Centennial Web site linked below.
|Date of Event:||October 14, 2008|
|Moderator:||Robert S. Kaplan, HBS Faculty|
|Speakers:||James Colica, Senior Vice President, GE Capital Services|
M.D. Ranganath, Chief Risk Officer, Infosys
Barry Zubrow, Chief Risk Officer, JP Morgan Chase
The global companies profiled in this session—Infosys, GE Capital Services, and JPMorgan Chase—highlight effective yet different approaches to risk management.
The common elements that panelists mentioned include: having top management lead risk management; creating a culture of risk management where it is part of all decisions; setting clear risk parameters and having them broadly adhered to; having the discipline to make risk management a priority in good times and bad; and setting clear measurements for risk management and making managers accountable for these measures.
Professor Robert S. Kaplan began the session by providing his perspective on why risk management plays an important role in firm performance.
Key concepts include:
- There is great value in understanding risk management at the firm level.
- Risk management is a key to sustained firm growth.
- At Infosys, the most significant risks faced are scaling the company and staying relevant to customers.
- At GE, effective risk management is based on strong management processes and controls.
- At JPMorgan Chase, the key elements of risk management are structure and culture, incentives, risk strategy and analytics, and "plumbing."