Perspectives on the Ethical Turn in Risk Management
from Part II - A View of Risk Culture Concepts in Firms and Society
Published online by Cambridge University Press: 22 May 2020
In the wake of the 2007–2009 financial crisis and subsequent financial services scandals, there are numerous normative and regulatory demands on risk managers to assess the ethicality of corporate plans and actions. An ethical turn in risk management looms, focusing the attention of boards and executive teams on a plurality of values at risk, rather than on a single or composite—and primarily financial—Value at Risk. The question of what risks an organisation is running is increasingly seen as intertwined with the ethical question of whose risks an organisation is managing—or even taking into account—a discussion that needs to be addressed in the “risk appetising process.” Based on case studies conducted in two Canadian high-reliability organizations, I show empirical evidence that some risk managers have created tools and processes that tangibly link risk management and business ethics. Drawing on the literature of new accounting emergence and behavioural ethics, I argue that risk managers have now the mandate, and possibly, the tools and processes to visualize and bring business ethics concerns to decision makers. Finally, I highlight two areas of concern where an explicit consideration of Values at Risks tools and processes might be necessary for generating constructive debate and action: corporate failures due to conflicts of interest, and the incubation of man-made disasters. I conclude that an ethical turn in risk management will require the ability to bring the ethical dimension to the fore by making values at risk an inescapable and actionable part of decision-making and formal control processes.
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