Risk Management Rarely Gets to the Root Cause

Large corporations typically have internal risk management functions. Many are staffed by individuals with advanced degrees—even Ph.D.s—in areas such as mathematics, statistics, actuarial science, etc. The role of these folks is to identify areas of financial risk and forestall or reduce the threat they pose to their employer’s profitability. Supply chain risk is evaluated and managed in this way. Over my career, I’ve worked with risk management groups and in my experience, they are staffed by very smart people. On the other hand—as I’ve seen with most corporate functions—they don’t seem willing to question corporate strategies or practices that have already been decided at the executive level. In other words, they know which way the wind is blowing and are reluctant to recommend any alternate strategy that would make them appear to be a rogue sect.

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