The Importance of Tone at the Top to Risk Management

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Board Perspectives: Risk Oversight, Issue 9

“Tone at the top” is about striking a balance between creating and protecting enterprise value. For example, if management’s focus is on the short term, the organization could undertake risks that mortgage the future. While balancing value creation, preservation and emphasizing short-term and long-term objectives, there is a straightforward concept which requires effective leadership and discipline to execute.

Effective risk management cannot happen in a vacuum. A leadership failure and the organizational “blind spots” that contribute to dysfunctional behavior will undermine even the strongest risk management capabilities. This issue reviews 10 indicators that collectively provide red flags that potential issues exist within an organization.

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