Accountability, Responsibility, and Risk Management
What do accountability, responsibility, and risk have to do with ethics in business? Everything. In today's transparent society, there is no place for dishonesty, arrogance, or greed in the executive ranks of a corporation or its board. Increased media exposure and the speed of information exchange will ensure that the work of directors is scrutinized far greater than ever before.
Due to greater media and public scrutiny, and the accountability and legal liability inherent in executive roles, many qualified individuals are reluctant to take on the responsibility of being a director.
In a speech given by United States Treasury Secretary Paul H. O'Neill to the University of Chicago Graduate School of Business, Mr. O'Neill addressed the future leaders and future business leaders about the challenges they face (O’Neill, 2002).
In Mr. O'Neill's opinion as to why corporate leaders have fallen, he had this to say, "…I think they strayed from their values in the anything-goes 90s, and by the time they realized how far they had strayed—after all, in their minds, everyone else was doing it, or would if they could—it was too late. Like frogs in boiling water, they didn't feel the heat until they were cooked. There was nothing special about these people, except their hubris. They abandoned any pretense of moral direction to follow each dollar down its path, and figured they'd return to the main road before anyone noticed they were gone. But after the bubble popped, there was nowhere to hide" (O’Neill, XXXXXXXXXXMr. O'Neill pointed out that while continuing with the accomplishments in the 90s-growth, productivity, and innovation-we need to actively work to make a new era of personal responsibility and public integrity.
In his conclusion, Mr. O'Neill stated, "In my view, the answer is simple: honest, accountable leadership. With leadership, everything is possible; without it, nothing is possible… Leaders must stand up and set an example not just for their employees, but for the general public as well. Honesty in business is the new patriotism. There is nothing better business leaders can do for this country right now than restore faith in the system that has made it great" (O’Neill, 2002).
What do scenarios like corporate financial collapse, environmental disasters, layoffs, and consumer law suits all have in common? These actions may not have to happen at all if corporations managed risk to their stakeholders and stockholders. Risk management is more important today than ever before. What's the answer? Effective corporate governance standards.
According to Brian Brown, president of the Winnipeg Chapter of the Institute of Internal Auditors and director of corporate audit services at Winnipeg-based Agricore United, there are four pillars that will prevent corporate problems. The four pillars are: the board of directors, management, internal auditors, and external auditors." Brown continues, "…to be effective, each of these four must operate independently. When |
they don't, massive problems can occur" (Diplock, 2002)
References
Diplock, J XXXXXXXXXXClarity begins at home. Retrieved August 24, 2009, from New Zealand Securities Commission Web site: http://www.sec-com.govt.nz/speeches/2002/jds151102.shtml
O’Neill, P. H XXXXXXXXXXRemarks to the Harvard Business School. Retrieved August 24, 2009, from U.S. Department of Treasury Office of Public Affairs Web site: http://www.treas.gov/press/releases/po3649.htm |