Making It Happen
There are three main lessons here for organizations:
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The first is the importance that needs to be attached to the setting out by their boards and senior management of a clear risk policy and to making sure that this is fully embedded in the controls and culture of the organization.
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The second is the importance of taking a wider view of risk management, embracing alternative scenarios and the possibility of system-wide shocks.
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The third is taking responsibility for the risks these pose.
For the authorities, the challenges include:
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Working together effectively on a global scale.
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Introducing proportionate responses to financial crises.
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Finding a way to translate global risks into the regulation of individual organizations.
Notes
1 Perrow, Charles. Normal Accidents: Living With High-Risk Technologies. New York: Basic Books, 1984.
2 Knowledge@Wharton. “Lesson one: What really lies behind the financial crisis?” Article discussing Professor Jeremy Siegel’s ideas. January 21, 2009. Online at: tinyurl.com/avowh6
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