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General Risk Management Ethics


MANAGING PEOPLE RISK

2018-04-04

Good day and welcome to the first post –Easter RISK ALERT!

Of recent the attention of the nation (Nigeria) has been continually drawn to the need to INVEST IN PEOPLE. As at date there have been calls by two different individuals, Bill Gate, the second richest man in the world and Bola Tinubu, a Nigerian politician and the former Lagos State governor, on the need to invest in PEOPLE, and that this is the only way the Nation as well as organizations can grow. While we agree with this assertion, we wish to state that in addition to INVESTING IN PEOPLE , we must also consciously put a structure in place for MANAGING PEOPLE RISKS to ‘make the equation balance’ so as to achieve maximum value from the contribution of people and ensure that the people that we invest in are not the same that would eventually lead the organization to downfall.

 The following two real life cases, taken from the aviation industry are instructive. Let’s go through them and discuss its application to our various responsibilities as Enterprise Risk Management Professionals in our organizations, whether in the financial or non – financial sectors of the economy.

CASE 1

’HIGHLY INTOXICATED’ PILOT LEAVES MORE THAN 100 PASSENGERS STRANDED FOR THREE DAYS

THE co-pilot of a Portuguese airline was detained in Stuttgart after being found drunk in the cockpit just before take off, leaving 106 passengers stranded.

According to the New York Post, Flight TP523 was scheduled to depart from Stuttgart to Lisbon, Portugal, on the evening of March 23 when an airport worker noticed the co-pilot walking unsteadily and smelling of alcohol.

Airport authorities were alerted, and the decision was made to keep the plane grounded.

Aviation authorities determined that the 40-year-old was unfit to fly. He was detained and bail was set at 10,000 euro ($A15,600).

He was also asked to surrender his flying licence. Police declined to give any additional details. All 106 passengers were given hotel rooms to stay overnight, German news agency DPA reported. There wasn’t a replacement crew available to fly passengers to Lisbon and the flight was rescheduled for March 26. The pilot, who was determined to be in a “highly intoxicated condition” on Friday evening was found to be “reeking of alcohol and walking unsteadily,” according to an official statement released by German authorities.

Culled from New York Post

 

The scenario represent some of the practises in organizations, albeit at different levels and in varying degrees. The most important thing however is that at any point in time, someone, somewhere has been trained by your organization and is placed in a position to commit or take decisions (on behalf of your organizations). But can you trust their judgements?

Are you really sure that the person steering the ship of your organization is not under any influence?

Influence may differ and may be various. The influence in one of the cases above is that of alcohol but it could be different in yours.  A particular bank headhunted a manager for a new branch in the FCT (Federal Capital Territory) only to later find out that the manager was a drunkard and continued with this habit even in discharging his duties as the manager of a branch that was so new and looking desperately for customers. He would at times be carried from a beer parlour and dumped in his car for the driver to drive him home. And this is a man that MUST take decisions on daily basis, write report on the progress made by the new institution, in a new market and also supervise other staffs that were also entirely new in the branch. What do you expect from his decisions and how reliable are reports submitted by him?

Influence may be the GREED factor. A particular branch manager of a bank in Nigeria was granted signing power of N2.5m per obligor subject to maximum of N50m for the branch. Just few months later the accounts were flagged by the Risk Management Group as Non Performing.  By the time the auditors visited, they found out that out of the 20 obligors (that made up N50m @ 2.5m) approved by the manager, 8 belonged to him. The facilities were given to his proxies who opened and were operating the accounts on his behalf. Imagine what would happen if that manager grows to be the Managing Director and can singly approve N100M per obligor without recourse to the board!

It has actually been established that in many of the bank failures witnessed in history Pre & Post Basel Accord, GREED has been a recurring decimal (sic). 

A research was carried in Tilburg University Netherlands, to determine whether a relationship exists between Greed and Compliance and the conclusion was positive, that there indeed exists a relationship between the two.

OTHER LESSONS LEARNT IN CASE 1

1. Enterprise Risk Management is everybody’s responsibility

As stated in the case, it was one of the Airport workers that noticed the misconduct on the part of the drunk pilot. It was because he was very dutiful, committed and conscious of his duties and the environment in which he works.

Do you as a staff have these kinds of attributes?

Are you really committed to your work and conscious of the happenings in your place of work? Are you aware that whatever any one does or did not do in your organization will always impact on the organization either in terms of success or failure?

Do you know that a risk that has the capability of destroying your organization may not even be taken by anyone in your department but in another department? If so, do you pay ANY attention to what goes on in your WHOLE organization or you are still thinking and acting on the basis that IT IS NOT MY BUSINESS?

ALSO when the Airport worker noticed this misdemeanour, he didn’t keep quiet and did not hoard the information. Rather he quickly alerted the airport authorities and the plane was grounded. What if the plane had moved?

We can see how the decision or action of one staff had saved the entire aviation industry and had prevented loss of 106 lives! Do you know if you had shared that information that you ‘stumbled’ on, it could have prevented your organization from losing millions in naira or dollar value? For instance every day Linda (a staff of an organization) closed late at work, she usually noticed that a particular department always left the lights on instead of putting it off as required, for safety reasons. Linda chose to always ‘help them put it off’ each time she met it like that instead of taking steps to also report the issue to the department first








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Past Comments


James onyekachi Onyeabor
Reputation risk need to be address in various organizations and institutions since many are yet to understand their place and contributions to organization can either make or maladministration vision and mission at long run.
posted on 2018-04-04

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