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Executives have a blind spot on risk, Annie Searle writes

Tuesday, June 27, 2017

C-level executives often have a blind spot that can put their organizations at risk, iSchool Lecturer Annie Searle writes in the final issue of The Risk Universe.

The blind spot she identifies is that CEOs are often, and sometimes willfully, unaware of key information about the risk posed to their businesses when they put their trust in people and processes. As executives, they are held accountable for outcomes, yet they must delegate to senior management teams. However, employees are often reticent to bring bad news to the boss, and the boss may be more inclined to accept a rosy picture than to go looking for problems.

Citing examples such as Uber, Searle writes: “If we follow the information trail as it moves from the original identification of the problem, we see that, as we go up the reporting chain, the information becomes increasingly more sanitized from manager to more senior manager; and that the information flow among the three lines of defense begins to fray as well. Not surprisingly, conduct risk is pervasive in today’s corporate environment, from the front line to the executive level. Financial loss is often the story of an executive or a manager gone wrong, concealing the true impact of a problem in order to protect bonuses and jobs.”

Searle has written essays for the magazine throughout its five-year run, focusing on her area of expertise, risk management.

Read the full column from The Risk Universe.