“How do you best manage risk?”
“Operate in full awareness of
risks and opportunities.”
The “great recession” has brought renewed focus on managing risk. There is no one best
approach. Each company should tailor its program to address its unique circumstances.
Yet, there are some common principles to consider.
Risk should be viewed broadly. Risk and its constant counterpart—opportunity—exist in
every decision, every operation, and every situation. The goal is not to avoid risk, but
to operate in full awareness of risks and opportunities, managing them to best serve the
company. With risk properly understood, the entire management process is in the risk
management business.
The entire corporate culture must be attuned to risk. All personnel should have the
obligation to report and escalate risk that arises within the sphere of their authority.
Neither insensitivity to risk nor fear of speaking out can be tolerated. If employees fail to
raise an issue, they have failed to do their job.
In Beckman’s law department, we keep an inventory of all of the ways legal risks
can arise. We list every executive, committee, dispute, transaction, project, external
constituency, and key area of law. And for each item, we assign one person to be
principally responsible for the legal issues associated with that item. This assignment
list leads to a monthly reporting mechanism that allows me to survey risk throughout the
enterprise and to hold specific individuals accountable for its management.
Having good processes is a start. A healthy respect for risk is just as important. Even if
you anticipate a risk, or identify it early and develop appropriate plans to address the
risk, your plans could fail. Even as you focus your attention on what you believe to be the
most important and immediate threats, others can develop quickly. Your best defense is
Arnold A. Pinkston
constant vigilance. Your worst enemy is hubris—a sense that it’s all under control.
Senior Vice President, General Counsel
and Secretary
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Beckman Coulter, Inc.
Brea, California