Abstract:

Recent history is littered with companies that have had excellent risk management structures, and yet have fallen prey or have been exposed to huge losses as a result of a failure to manage risk. What causes this? Why does a good risk management structure and robust processes fail to deliver results? The aftermath of September 11 highlighted how emotions affect people's response to risk. Research has compared the effect on workers close to the site as similar to how refugees respond [1], has demonstrated the effect that anger and fear can have on risk judgments [2], and contends that people assets can only be harnessed by managing both intellectual capital (your peoples' knowledge) and emotional capital (the feelings, thoughts and emotions of your people) [3]. How can we engage these emotions so that we can move from a process (head) to a preference (heart) response and more importantly how can we have a practical and positive impact on our organisations Risk Management culture? In this paper David Smith examines these issues and provides an organisational risk management growth model as an answer to these questions.
Received from the Guest Editor on July 31, 2006
References: 18