03 May 2011  Working Papers

How Do Risk Managers Become Influential? A Field Study of Toolmaking and Expertise in Two Financial Institutions

Executive Summary — Most organizations have technical experts on staff—accountants, finance professionals, internal auditors, risk managers-but not all experts are listened to at higher levels. To understand how expert influence on strategic thinking can be increased, Matthew Hall, Anette Mikes, and Yuval Millo followed the organizational transformation of risk experts in two large UK banks. One transformation was successful, the other not. Are your experts merely "box-tickers," or are they influential "frame-makers"? Key concepts include:

  • In the first bank, the transformation of the role of experts was a movement from tacit knowledge, communicable person-to-person, to tools-mediated, highly communicable knowledge that was evident from a variety of organizational documents, practices, and technologies, and embedded in the organization's decision-making processes.
  • These transformed experts, called frame-makers, avoided detaching themselves completely from the resulting knowledge and maintained a high degree of personal involvement in producing analysis and interpretation while participating in executive decision-making.
  • While toolmakers may be successful in becoming frame-makers they might also fall into one of three less influential roles: box-ticker, disconnected technician, or ad hoc advisor.
  • The second bank saw a struggle between conflicting risk management worldviews, which ultimately divided the risk function, and prevented the risk managers from reaching the influential role of frame-makers.


Author Abstract

In this study, we examine transformations in the influence of risk managers in two large UK banks over a period of five years. Our analysis highlights that a process we term toolmaking, whereby experts adopt, adjust, and reconfigure tools that embody their expertise, is central to the way in which the risk managers in our study attempt to gather influence in their organizations. Based on our longitudinal field study, we identify two dimensions that help to explain the organizational influence of experts: their ability to (a) incorporate their expertise into highly communicable tools and (b) develop a personal involvement in the deployment and interpretation of those tools in important decision-making forums. Based on the different combinations of these two processes, we distinguish analytically among four clusters of actions and tools-those of the compliance expert, the technical champion, the trusted advisor, and the engaged toolmaker-and explain the dynamics of expert influence as risk managers adopt different practices. Our empirical findings and theoretical framework contribute to our understanding of the nature of expert influence and how risk managers may become influential.

Paper Information