May 29, 2014

Research, industry insights highlight risk series

Bringing together and building upon the issues and challenges examined over four half-day sessions, the fifth and concluding entry in the Risk Institute Executive Education Series, “Balancing Risk and Opportunity to Create Value,” offered a mix of academic expertise and practitioner perspectives.

The result: a deep dive into an integrated approach to risk management aimed at senior-level professionals interested in improving and leading the practices of their companies and organizations.

Anil Makhija

“The series has been developed to bring the best of academic research in the area of risk management and directly apply it to the practitioner setting,” said Michelle Norris, program manager for Executive Education at Fisher. “The opportunity for leaders to enrich their knowledge, build their skills, and engage with thought leaders in their fields is foundational to our executive education offerings.”

Bernadette Minton

Fisher’s Risk Institute is dedicated to advancing a holistic, interdisciplinary exploration of risk through research, education and outreach -- focusing on how risk impacts all aspects of an organization, including strategy, security, operations, reputation, globalization, and more.

The final session of the series inside Pfahl Hall featured Senior Associate Dean and Professor of Finance Anil Makhija and Professor of Finance Bernadette Minton, who focused on the challenges of enabling the right risk culture within an organization -- specifically the role of governance and incentive compensation.

“Risk governance systems should be structured to ensure that the firm’s managers choose the level of risk that maximizes firm value,” Minton said. “Integrated risk management is not just about minimizing risk, it is also about taking on risks which create value.”

Panelists, from left, Don Shackelford, Jerry Jurgensen and Bill Lhota, with moderator Bob Lane

Fisher Senior Lecturer in Finance Bob Lane then led a panel of industry experts featuring:

  • Jerry Jurgensen, former CEO of Nationwide Insurance and current board member of AIG
  • Bill Lhota, former executive of AEP and board member of various public companies
  • Don Shackelford, chairman emeritus of Fifth Third Bank

The panel fielded questions on a wide range of topics from attendees, providing insights and challenging notions of how risk is often considered and discussed within organizations.

“My view of risk management is to organize all the risk that an organization facets – not just financial risk, not just operational risk, but also reputation risk and other areas,” Lhota said. “ … So when we look at risk, we need to look at the whole list of the risk to the organization, make sure that risk is properly managed, and that there are controls in place to monitor what’s happening on a day-to-day basis.”

Said Jurgensen: “I always find it interesting that, when I listen to and participate in conversations about risk, the tendency of those discussions is to go to the dark side of risk. I love risk … to me, it starts with the fact that if there is no risk, there’s no entitlement to return. However, most of the time when we talk about (risk), we talk about it from the negative connotation -- i.e. risk means something bad happens -- when, actually, risk means the probability and implications of an unintended outcome.”

Previous entries in the Risk series addressed additional topics, including: building the foundational elements of a solid risk management framework; learning to leverage advanced analytics in risk management; using economic and strategic analysis to better understand competitive environment and consider risk implications; and emphasizing the importance of effective communications in managing risk.