Magazine article Risk Management

Corporate Acceptance of Risk Management

Magazine article Risk Management

Corporate Acceptance of Risk Management

Article excerpt

A well-structured risk management program is vital to maintaining the financial strength of companies. In an era where corporate downsizing is the norm, however, many risk management departments face budget cuts. Additionally, "risk managers often feel like they are not treated with sufficient respect and do not receive due recognition for their valuable contributions," said Chrys A. Martin, an attorney with Bullivant, Houser, Bailey, Pendergrass & Hoffman in Portland, Oregon. Speaking at RIMS 38th Annual Western Regional Conference held in Welches, Oregon from September 20 to 23, Ms. Martin stated that the challenge for risk managers is to demonstrate their accomplishments to the company's key decision-makers.

In many organizations, risk management goes unappreciated because senior management considers it a staff function rather than a line function. Since staff departments are often viewed as taking money away from the bottom line -- whereas line departments are seen as bringing profits into the corporation -- it is critical that risk managers market themselves internally as a profit center. "Get yourself viewed as a line department," said Ms. Martin. "Or, align yourself with line departments because they can go to bat for you with whoever it is you need support from."

How do risk managers portray the risk management department as a profit center? "Risk managers need to develop a self-promoting, educational campaign to help upper management understand the risk management function," said Ms. Martin. There are three keys to this campaign. The first is what Ms. Martin calls "just say yes." Too often, department heads believe that risk managers say "no" to their plans due to the fear of liability exposure. As a result, risk managers sometimes develop a negative reputation within their organizations; in some cases, line managers may even circumvent the risk management department in order to accomplish their goals.

Consequently, risk managers must develop a positive image within the organization. To do this, the risk manager should "become proactively involved in the day-to-day activities of the line departments," said Ms. Martin. "By being involved in these day-to-day operations, you'll play an integral part in the development of company plans, products or services."

In order to play a role in the activities of line departments, risk managers must develop positive interdepartmental relationships. …

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