Tag Archives: board governance

2016-03-21 by: James Bone Categories: Risk Management Navigating the Digital Age PaloAlto Networks & NYSE

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No issue today has created more concern within corporate C-suites and boardrooms than cybersecurity risk. With the ability to shatter a company’s reputation with their customers and draw criticism from shareholders, lawsuits from affected parties, and attention from the media, the threat of cyber risk is ubiquitous and insidious. No company, region, or industry is immune, which makes the responsibility to oversee, manage, and mitigate cyber risk a top-down priority in every organization.

2014-12-06 by: James Bone Categories: Risk Management Cicero: Why we kill the messenger

free_57281 images for thegrcbluebook shadow of man“When you wish to instruct, be brief; that men’s minds take in quickly what you say, learn its lesson, and retain it faithfully. Every word that is unnecessary only pours over the side of a brimming mind.”
Cicero, Marcus Tullius unknown 106-43 BC

Marcus Tullius Cicero was murdered by decree on December 7th in the year 43 BCE. He was a lawyer, statesman, politician and philosopher and came to be known as one of Rome’s greatest orators. Marcus Tullius Cicero was an avid thinker and writer and his texts include political and philosophical treatises, orations and rhetoric, the latter of which has come to be known as “Ciceronian rhetoric,” and an amass of letters.

How is a Roman philosopher relevant to 21st century risk professionals?  Even the most educated and articulate practitioner of the art of risk management can be fooled by randomness.  The influence of philosophical thought between 150 – 20 BC evolved during a time of change brought on by war and in intellectual thought. Alliances were formed and dissolved through marriage, assassination, or political arrangement by the ruling class to maintain power.

The ability to persuade one’s audience through effective rhetoric being one of the most prized skills in the legal and political arena helped to build and sustain influence during periods of relative stability.  It is fair to say that the rigor of probability were not mathematically advanced during Cicero’s era however the intellectual pursuit of understanding random events were no less important in the Roman empire than they are in today’s modern business or political setting.

The practice of probability was best described in the school of thought called the “Skeptics” in the pursuit of truth, ethical behavior, and the proper role of civil life.  These words and ideas did not exist before Socrates, Cicero and other philosophers “invented” Latin names in an attempt to establish “ideal” societal behavior given the less than ideal lawlessness that was often the norm of the day.

“Cicero was most aligned with the Academy Skeptics and the general view that nothing can be known with certainty and that ‘truth’ is essentially relative probability. The skeptic approach appealed to him especially as an effective strategy in law and politics. The skeptic must seek as many perspectives as possible and tease out as many probabilities in order to present a valid argument. As well, it also accepts and advocates malleability as probabilities and perspectives fluctuate over time, and ‘evidence’ proves otherwise.”

The skeptics’ school of thought is still prevalent in today’s scientific approach to probability, mathematics, physics, and applied quantitative big data.  But what led to Cicero’s untimely and violent end?  He was victim to the same error many make in the pursuit of the ideal to find truth.    “Truth”, like risk, is in the eye of the beholder and the person in power gets to determine what truth is and how to manage the risk that threatens the truth they wish to manage.

Human nature has changed very little in over 3,000 years!

Cicero was first exiled then unceremoniously murdered by Roman solders and his body parts displayed in the Roman Senate as a message to others whose narrative was not aligned with current leadership.

This is why corporate governance is so challenging to address effectively.  Early retirement, job reassignment and staff reorganizations have displaced summary executions but the effect is the same.

Is there a silver lining?  Cicero’s writings and philosophical teachings have influenced leaders through the century and continue to be the cornerstone of regulatory guidance but the challenges remain.  Human nature is hard to overcome.

2013-07-11 by: James Bone Categories: Risk Management Expectations of Risk Management Outpacing Capabilities – KPMG study

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In December 2012, the Economist Intelligence Unit carried out a global survey on behalf of KPMG International. This survey gathered data from 1,092 respondents around the world in a closed-ended online questionnaire. All were C-level executives: 28 percent were Chief Executive Officers or equivalent and 18 percent were Chief Financial Officers, the two largest groups. Five percent were Chief Risk Officers.
If you combine those in the risk function and departments that work most closely with risk (legal, compliance and audit), the number comes to 131 people, or 12 percent of the total.

TheGRCBlueBook mission is to become a global risk and compliance community site and resource portal for sharing best practice across all highly regulated industries.  A one stop source for all things risk and compliance related.

2013-05-25 by: James Bone Categories: Risk Management Standard and Poors grade Corporate Governance: Only 6% get an A

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As of May 2013, Standard & Poors has completed its evaluation of non-financial firm management and governance factors for 2,190 publicly and privately rated North American companies and the results are dismal.  S&P has also scored a global score to 3,868 firms with only 8% receiving its highest rating.

 “Standard & Poors uses the management and governance scores to modify its evaluation of an enterprise business risk profile, a key component of its credit rating.”  S&P’s methodology uses 15 criteria for evaluating corporate governance across five categories. 

The categories include:

  • Management, which includes;

  • Strategic positioning,

  • Risk management/financial management, and;

  • Organizational effectiveness; and

  • Governance

“The Management and Governance criteria for nonfinancial companies consist of eight management subfactors and seven governance subfactors. Depending on how an entity scores along these subfactor dimensions, S&P issues one of four scores: strong, satisfactory, fair, and weak.”

6% of firms scored “Strong”

26% of firms scored “Satisfactory”

65% of firms scored “Fair”

3% of firms scored “Weak”

In its May 13, 2013 press release, S&P disclosed the names of those companies that received a “Strong” or “Weak” designation. See the list in the May 13, 2013 press release.

TheGRCBlueBook mission is to become a global risk and compliance community site and resource portal for sharing best practice across all highly regulated industries.  A one stop source for all things risk and compliance related.

2013-03-05 by: James Bone Categories: Risk Management Board governance depends on where you sit by William George

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