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Book Review
By Socrates Coudounaris
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Every once in a while, a new book emerges, which breaks away from the mould of a textbook approach to risk management and corporate governance codes. “Corporate Risk and Governance: an End to Mismanagement, Tunnel Vision and Quackery” by Alan Waring (www.gowerpublishing.com/isbn/9781409448365) is more of a ‘thinking aid’ rather than being a prescription to risk management seeking to take the reader through a radical revision of corporate and managerial thinking.
Alan has stayed away from a ‘cookbook’ approach, rather concentrating on jargon free messages, key definitions and concepts. In fact this book acts as an excellent reference material to be used by both risk practitioners and board members who may seek tangible guidance through the superb list of cases on what might ‘bad look like’ and what pitfalls to avoid, learning from other’s mistakes.
Early on the reader understands that corporate risk issues cannot be reduced to simply being ‘neatly stackable and fixable’ and the stark reality that only the minority of organizations make any serious and sustained attempt to put their fine words into practice.
Unlike other publications, Alan places greater emphasis on the people who are governing organizations and their attitude and appetite to risk taking. The reader is exposed to damage to businesses, the demise in corporate reputations and in some cases corporate disasters being attributed to the fertile mix of faulty risk cognition, human weaknesses and fallibility, dysfunctional organizational cultures and toxic power relations!
Through no less than 77 cases, the reader comes across incongruous beliefs that risk management interferes with ‘proper’ business management, management playing down or ignoring significant threats, to corporate thinking on the lines of ‘what can we get away with’ and the stark realization that some just will not accept that anything bad will happen and that risk management needs tightening up.
“Corporate Risk and Governance: an End to Mismanagement, Tunnel Vision and Quackery” accepts no boundaries citing cases across all corners of the globe; from Barings bank, the Ponzi scheme, Enron, Olympus to BP and Maxwell/Mirror Group Newspapers. In the author’s experience, most board members are decidedly uncomfortable with dealing with ‘people risks’. Examples throughout this book point to various characteristics of individual directors summarized variously as being ‘obstinate, authoritarian, terrifying, capricious, a bulldozer’ and so on. Alan draws upon some excellent analogies from family run businesses and the all important role of the Non Executive Director who should be selected for their knowledge, expertise, experience as well as their integrity boldness and independence.
Moreover, this book explains the fixation across the globe with salvation models and referring to their shortcomings. Thankfully, the latest ISO 31000 has been issued as a risk management guidance standard with no possibility of certification attached to it. It is precisely this comfort that Professor Roberta Romano is cited in her own words saying that SOX is ‘quack governance’ and the time, cost and energy drain of SOX compliance can render an organization exhausted and antagonistic towards genuine ERM.
The reader will come across both high profile cases as well as perhaps not so well known cases. What makes this book so intriguing are in fact these cases citing the countless misdemeanors from man-made disasters, immovable property fraud cases, banking and airline carriers all sharing prime behaviours that are clearly and factually described collectively riddling the small island of Cyprus to eventually require an EU bailout in 2013.
The book is by no means all doom and gloom, citing amongst others well handled Business Continuity and Crisis Management events namely PRUPIM who have handled successfully safe evacuations following bombings throughout their properties in the UK.
This book certainly reaches its claimed objectives in describing, analyzing and discussing a range of interrelated corporate risks and governance issues. Alan has pragmatically and clearly illustrated why corporate governance failures take place and the value add in those lessons learned from around the globe.
A must read for all those who believe that good corporate governance and robust risk management do not happen by chance!
Socrates is a Senior Manger at PwC More London Riverside offices, a Fellow and Non Executive Director at the Institute of Risk Management with over 15 years international experience in risk management.
