Panellist at MetricStream Operational Risk Roundtable event in London - http://www.chaordicsolutions.co.uk/blog/from-our-risk-management-consultants/panellist-at-metricstream-operational-risk-roundtable-event-in-london/

http://www.chaordicsolutions.co.uk/blog/from-our-risk-management-consultants/panellist-at-metricstream-operational-risk-roundtable-event-in-london/

Our Senior Partner, Robert J Toogood, will be panellist at MetricStream Operational Risk Roundtable event in London.

Extract from MetricStream Press Release:

MetricStream, the market leader in enterprise-wide Governance, Risk, and Compliance (GRC) solutions, will co-host a roundtable with HCL on Operational Risk Management in London on October 15, 2013.  Leading research analysts and subject matter experts on operational risk will convene at the event to share their ideas, views, and best practices when it comes to today’s biggest issues and challenges in operational risk management.  The event will also highlight innovative ways to build a sustainable operational risk management culture, driven by the proven capabilities of advanced integrated risk management technology solutions.

Our dynamic, volatile, and global marketplace is fraught with risks, rising customer expectations, a flurry of complex regulations, disruptive technologies, and mounting competition.  On top of that, internal and external challenges such as fraud, human error, natural and man-made damage to physical assets, and system failures also threaten business viability and business performance.  Today, effective operational risk management is not just a business necessity, but a strategic imperative.  Embedding an effective operational risk management program into the day-to-day business operations can help avoid substantial organizational loss.  This can also enable businesses to collaborate, transcend silos, and correlate information that provides risk insight that can guide strategic business decision-making at the executive management level.

Event speakers include Piyush Pant, Vice President of Strategic Markets at MetricStream, Cedric Merahi, Risk Management Specialist at ActivSi, David Paris, Global Solutions Partner at HCL, Philip Martin, Chief Executive at Enterprise Risk Advisors, and Robert Toogood, Senior Partner at Chaordic Solutions.  Hosted in association with HCL, the roundtable will feature two different panel discussions – Role of Operational Risk Management within the Enterprise Risk Management Structure and Incorporating Operational Risk Intelligence into Strategic Business Decisions.  These sessions will underscore the need for organizations to gain complete control over operational risks, which have the potential to impact other risk areas, and jeopardize an organization’s operations and reputation.

Assumptions on financial scandals challenged - http://www.chaordicsolutions.co.uk/blog/from-our-risk-management-consultants/assumptions-on-financial-scandals-challenged/

http://www.chaordicsolutions.co.uk/blog/from-our-risk-management-consultants/assumptions-on-financial-scandals-challenged/

Assumptions on financial scandals challenged: effective risk culture also needs climate of trust and communication.

 

Extract from LSE and Plymouth University Press Release:

Joint research from London School of Economics (LSE) and Plymouth University published today (31 October) dispels ‘myths’ that poor or deviant risk culture in financial institutions was mainly responsible for recent scandals.

The report, Risk Culture in Financial Organisations, says that current debates misleadingly equate risk culture with greater precaution and risk aversion.  It challenges the notion that there is a clear distinction between ‘strong’ and ‘weak’ risk cultures.

One of the report authors, Professor Mike Power, an academic expert in risk management from the LSE, comments, “The risk cultures of financial organisations are full of trade-offs, and how they manage those trade-offs is fundamental.  This clearly includes, but is not restricted to, the need to balance risk and return.  In addition, we find that ‘good’ risk culture is as much about organisational clarity and confidence in making these trade-offs, as it is about the level of risk taken as such, or indeed about ethics.”

The report also questions the direction of certain financial sector reforms, including the significant focus on issues such as governance, ethics and incentives.

Professor Power led the 18-month project in association with Dr Simon Ashby from Plymouth University, who is also a former financial regulator and risk management practitioner, and Dr Tommaso Palermo from the LSE.

Lighthill Risk Network is one of the consortium of private bodies funding the work. The other members of the consortium are the Chartered Institute of Management Accountants and the Chartered Insurance Institute in association with the Government funded Economic and Social Science Research Council (ESRC).

Lighthill Risk Network director Dickie Whitaker says, “Reports on the financial crisis, such as the work of the Parliamentary Commission on Banking Standards, as well as numerous investigations into more recent scandals including LIBOR fixing and the London Whale, all highlight the significance of deviant risk cultures which have permitted unethical and destructive behaviours.

“However, to date, despite this great interest, there remains a significant lack of clarity about what the concept of risk culture actually means and therefore about how financial organisations should go about ‘strengthening’ their risk cultures. The report provides a unique perspective on the concept of risk culture and fills a key gap between academic research and industry practice.”

The team’s aim was to work with senior risk managers from a number of financial organisations to effect knowledge exchange, providing insights to improve their ability to understand and potentially manage their risk cultures.

It looked to reinforce its practical experience in risk management, and contacts from the financial services sector, with a robust academic approach to investigating the risk cultures of financial organisations.

Challenge to sector reforms

The report also challenges the direction of certain financial sector reforms, including the significant focus on issues such as governance, ethics and incentives. For example, the report highlights some key issues with the “three lines of defence approach” that is increasingly popular within financial institutions, where the staff within central risk functions are kept at arms-length from business level decision making.

Dr Simon Ashby comments, “The three lines of defence approach has a fatal flaw – while it may prevent risk staff from getting too involved in business level decisions and thus ‘going native’, it can also drive a wedge between risk staff and business management – leading to mistrust and mis-reporting.

“Often it is better to blur the first and second lines as this can improve interaction between staff.  In the end risk culture is as much about creating a climate of trust and communication as it is about lines of demarcation”.

The report is published by the Financial Services Knowledge Transfer Network and is available at http://www.lse.ac.uk/researchAndExpertise/units/CARR/home.aspx

Running workshop for Jersey branch of ICSA - http://www.chaordicsolutions.co.uk/blog/from-our-grc-consultants/running-workshop-for-jersey-branch-of-icsa/

http://www.chaordicsolutions.co.uk/blog/from-our-grc-consultants/running-workshop-for-jersey-branch-of-icsa/

Running workshop for Jersey branch of ICSA: about value of establishing culture which supports ethical behaviour.

 

 

Our Senior Partner, Robert J Toogood, is running a workshop session for the Jersey branch of the Institute of Chartered Secretaries and Administrators (ICSA) on 1 October, about the value of establishing a culture which supports ethical behaviour and established ‘self discipline’.

For the last five years, the ICSA Jersey Branch has organised a popular series of one hour evening workshops for its members, students and non-members … and this session is the first in the 2013/2014 series.

Robert will be presenting the workshop in conjunction with Helen Hatton from Sator Regulatory Consulting.  Helen will provide an introduction on the regulatory intervention role ‘regulatory discipline’ arising when ‘self discipline’ fails.  Robert will then talk about the value of establishing a culture which supports ethical behaviour and established ‘self discipline’, thus improving governance, compliance and effectiveness.

More … http://www.icsajersey.org.je/ICSA-Jersey-Branch-Seminars/evening-workshops-2013-2014.php

Steps for navigating complex projects identified - http://www.chaordicsolutions.co.uk/blog/from-our-programme-and-project-management-consultants/steps-for-navigating-complex-projects-identified/

http://www.chaordicsolutions.co.uk/blog/from-our-programme-and-project-management-consultants/steps-for-navigating-complex-projects-identified/

Steps for navigating complex projects identified: success determined by mix of capabilities applied not complexity.

 

Extract from Project Management Institute (PMI) Press Release:

Project Management Institute (PMI), the world’s largest not-for-profit membership association for the project management profession, today announced the release of Pulse of the Profession™ In-Depth Report: Navigating Complexity. Expanding on findings from the 2013 Pulse of the Profession, which revealed that companies risk $135 million for every $1 billion spent on a project, the new complexity report reveals that average budgets for projects that are highly complex are nearly twice as large than those with lower levels of complexity—using significantly more resources and putting even more dollars at risk for the organizations managing them.

Although there may be a perception that navigating complex projects requires a different set of skills or capabilities, PMI’s research proves otherwise. Regardless of the number of highly complex projects, organizations are managing projects with relatively the same set of project management techniques, methods and practices, and have about the same level of project management maturity. Further, PMI’s research confirms that a project’s success or failure is not determined by the degree of complexity, but by the mix of capabilities applied.

While the new report finds several commonly reported attributes of complex projects, including ambiguity and divergent stakeholder agendas, there are no universal parameters for defining complexity. Engaging in debate about a definition may only serve to distract organizations from implementing practices that will improve the outcomes of all projects and programs.

As reported in the 2013 Pulse of the Profession, high-performing organizations have mature project management practices, align their talent management with organizational strategy, and are significantly more likely to be highly effective communicators. High-performing organizations achieve an average project success rate of 80 percent, and risk 14 times fewer dollars than low performers.Considering that average budgets for highly complex projects are nearly double those with less complexity, success in this area translates into a big boost to the bottom line — and requires more attention from organizations.

Additionally, the complexity in-depth research finds that high performers are focusing on specific capabilities within these three broad areas to manage highly complex projects:

1. Create a culture of project and program management with engaged project sponsors.

Organizations with mature project management practices average a significantly higher percentage of projects meeting original goals and business intent compared to organizations with less mature practices. Pulse research reveals that 79 percent of projects undertaken by high performers have active project sponsors, compared to less than half (43 percent) at low-performing organizations.

2. Assess and develop talent with a focus on fostering leadership skills.

Among successful organizations, leadership development is most aligned to organizational strategy. PMI’s Pulse of the Profession In-Depth Report: Talent Management revealed that 70 percent of organizations have aligned their leadership development program to organizational strategy.

3. Communicate effectively with all stakeholder groups.

As revealed in PMI’s Pulse of the Profession In-Depth Report: The Essential Role of Communications, one out of two failed projects can be attributed to poor communications. High performers report that effective communications to all stakeholders—more than any other factor—has the greatest impact on highly complex projects, and place more importance on effective communications than low performers do.

Consistent success of projects, regardless of the level of complexity, stems from mature project management practice that is rooted in sound fundamentals, including effective stakeholder management, transparent communications, engaged project sponsors, and strong alignment of projects and talent development to high-level strategy. With a solid project infrastructure in place, organizations can achieve success by adapting to and addressing the myriad factors that contribute to project complexity.

The 2013 Pulse of the Profession™ In-Depth Report: Navigating Complexity is the latest follow-up study to PMI’s benchmark 2013 Pulse of the Profession™ report, which charts the major trends for project management.

More … http://www.pmi.org/Knowledge-Center/Pulse/Complexity.aspx

 

Quick, easy, reliable resource to assess organizational culture - http://www.chaordicsolutions.co.uk/blog/from-our-change-management-consultants/quick-easy-reliable-resource-to-assess-organizational-culture/

http://www.chaordicsolutions.co.uk/blog/from-our-change-management-consultants/quick-easy-reliable-resource-to-assess-organizational-culture/

Quick, easy, reliable resource to assess organizational culture: starting point for sustainable, successful change.

 

We are pleased to announce that Chaordic Solutions has now partnered with now OCAI-Online to make the Organizational Culture Assessment Instrument (OCAI) available to our clients … a hassle-free, online based tool for diagnosing and helping to manage organizational culture.

Completing Values Framework

OCAI is a validated instrument, used by over 10,000 companies worldwide.  It is based on based on the highly respected work of Professors Robert Quinn and Kim Cameron, who are responsible for developing the Competing Values Framework.

Using an analysis of thirty-nine indicators for organizational effectiveness, Cameron and Quinn discovered two important dimensions within their data.  From further analysis, they were able to identify four quadrants that corresponded with the four organizational culture types that they had found that differed strongly along these two dimensions … what they subsequently referred to as the Competing Values Framework:

 

 

Internal focus and integration VS External focus and differentiation

 

Stability and control VS Flexibility and discretion

 

 

 

 

To the left in the graph, the organization is internally focused: what is important for us, and how do we want to work? However, to the right the organization is externally focused: what is important for the outside world, the clients, and the market?

At the top of the graph, the organization desires flexibility and discretion, while at the bottom the organization values the opposite: stability and control.

Different Types of Culture

 

Every organization has its own mix of these four types of organizational cultures. This mix is found by the completion of a short questionnaire. This assessment is a valid method to examine organisational culture and the desire for change.

 

 

Successful organizational change is all about changing “the way we do things around here”: what you need is actual behavior change.  Working with your workplace culture is an excellent way to create this kind of real change.  The OCAI tool is a great starting point followed by engaging OCAI workshops that entice people to co-create their culture and take ownership for the change.

Importance of Culture

For over 25 years we have been helping senior executives to cope with complex organizational change.  Over this period, we have recognised the increasingly important role that culture plays in providing a foundation for success.  Our recent research into the barriers to implementing an integrated approach to governance, risk and compliance (GRC) has provided tangible evidence to support this view.

In conjunction with our ongoing consulting activities, we are now researching this area in more depth as part of our doctorate research activities into how the culture of an organisation can be influenced to make it more receptive to enterprise-wide initiatives such as compliance as well as GRC itself.

Our use of the OCAI-Online tool is a key part of our consulting and research activities.

Next Steps

We believe the OCAI provides a very useful and powerful starting point for sustainable, successful organizational change.  If you take the time for a serious dialogue about the outcome, you will achieve breakthrough results later on in the process.

Contact Robert J Toogood via email or on +44 (0)1983 617241 to find out more about how you and your organisation can benefit from using this exciting tool.

IRM GRC SIG session on 13 September discussing ethical aspects of corporate governance regulation and guidance - http://www.chaordicsolutions.co.uk/blog/irm-grc-special-interest-group/irm-grc-sig-session-on-13-september-discussing-ethical-aspects-of-corporate-governance-regulation-and-guidance/

http://www.chaordicsolutions.co.uk/blog/irm-grc-special-interest-group/irm-grc-sig-session-on-13-september-discussing-ethical-aspects-of-corporate-governance-regulation-and-guidance/

You can now book your place for the next IRM GRC SIG Keep-in-Touch call on 13 September at https://irmgrcsigseptember.eventbrite.co.uk

The purpose of this month’s informal Keep-in-Touch session is to review and discuss feedback on the recently published report entitled “Review of the Ethical Aspects of Corporate Governance Regulation and Guidance in the EU”, available for download from this location:

http://www.ibe.org.uk/userfiles/op8_corpgovineu.pdf

The report is being shared as it relates to some of our recent SIG discussions about the importance of governance/leadership in supporting an effective orchestration/integration of governance, risk and compliance within an organisation.

More … http://theirm.org/events/GRC_SIG.htm

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More information from original FERMA email press release:

Questions of ethics, or the ‘right way to run a business’, are inherent in all aspects of corporate governance, including the way the board conducts itself. Ethical choices are relevant to the business strategies that boards pursue and the way that they direct and structure the business to achieve them.

A new report, A Review of the Ethical Aspects of Corporate Governance Regulation and Guidance in the EU published today by the Institute of Business Ethics, in association with ecoDa, the European Directors’ Association, examines corporate governance policy debates and frameworks.

Its findings draw attention to a notable lack of explicit reference to ethical imperatives, and so raise questions about why this is the case, whether this should be addressed and how.

This Occasional Paper explores the extent to which, in legislation, frameworks and codes for corporate governance across the EU and within its member states, there are explicit statements or requirements for business to be governed in line with ethical principles or commitments.

Julia Casson, author of the report, said: “We began this report wanting to understand whether there was guidance for companies in governance policies, at national and EU level, on ethical business practice. Although we did find similarities in corporate governance requirements around practice and certain issues, there seems to be a general lack of ethical language in corporate governance provisions. This is in spite of the fact that boards are expected to set the values which will guide their company’s operations.”

For some key governance issues that boards have been expected to address, the explicit driver is most often given in terms of what is ‘good for business’ rather than engagement with any moral imperative. This is the case even though what is generally viewed as unethical behaviour, including at the most senior levels, has led to business failure on numerous occasions. The link has yet to be explicitly made in corporate governance discourse that what is ethical is very often good for business, or at least that what is unethical generally impacts negatively on business.

At the member state level, the beginnings of a greater focus on board behaviour and conduct can be seen, especially in guidance for directors.

Some governance codes contain ‘various rules of conduct’ ( i.e. commitment, leadership, discretion, independent judgment, integrity, acting in the corporate interest and acting in the interests of stakeholders) and refer to behaviours required by boards.

Patrick Zurstrassen, Chairman of ecoDa said: “The purpose of governance can be said to be to encourage companies to make robust decisions, manage risk properly and account to those that provide their capital. To complete this approach, it is essential to get individual board members with a great sense of ethics and a collective mindset in line with the company’s values”

Philippa Foster Back OBE, Director of the IBE said: “Attention to ethics is increasingly a core feature of boardroom agendas. Many companies recognise business ethics, sustainability and social responsibility, and also boardroom ethics, as characterising the right way to run a business as well as being essential for long term success. This is in spite of the apparent lack of explicit engagement at EU level with ethical principles in corporate governance guidance, and the limited requirement, or indeed encouragement, that boards operate with high ethical standards,.”

More … http://www.ibe.org.uk/index.asp?upid=52&msid=8

Using ambiguity, complexity and effective communication to stop organisational meltdown - http://www.chaordicsolutions.co.uk/blog/from-our-change-management-consultants/using-ambiguity-complexity-and-effective-communication-to-stop-organisational-meltdown/

http://www.chaordicsolutions.co.uk/blog/from-our-change-management-consultants/using-ambiguity-complexity-and-effective-communication-to-stop-organisational-meltdown/

Using ambiguity, complexity and effective communication to stop organisational meltdown: introducing the Helix of Change™.

 

From Robert J Toogood, Senior Partner – Chaordic Solutions:

When the world changes faster than people are able to adapt to it then this is when something called chaotic change can take over … and if left unmanaged, can result in organisational meltdown and ultimately, failure.  However, whilst this form of chaos brings uneasiness, it can also be used as a powerful catalyst for creativity and growth.

Introducing the Helix of Change™

Several years ago, we started to research one aspect of how change occurs within nature and how this relates to what happens in organisations.

You may already know that at the very centre of growth within the natural world is something called the Helix of Life aka DNA.   The Helix of Life is a complicated structure … consisting of two long chains of molecular building blocks called nucleotides, twisted into a double helix and joined by things called hydrogen bonds.

If we use this analogy for describing chaotic change then our view is that one long chain of the double helix could represent ambiguity and the other complexity, with effective communication as the equivalent of the hydrogen bonds that keep the structure together.  We referred to this at the time as the Helix of Change™.

In the natural world, when allowed to operate healthily, all is well and the life form is able to survive.  However, if the hydrogen bonds fail or get damaged, the organism dies.

So it is in organisations … effective communication is essential for our survival and if this fails, then ambiguity and complexity get out of control resulting in chaotic change which if left unmanaged, can result in organisational meltdown and ultimately, failure.

The American writer Henry Adams (1838-1918) once said that “Chaos often breeds life, when order breeds habit”.  So for some time now, a degree of chaos within an organisation has been recognised as potentially healthy and possibly, even desirable.

Indeed, chaos can sometimes develop as a result of management’s own attempts to use creative tension within the organisation to create a shared vision as advocated many years ago by Peter Senge in The Fifth Discipline.  “A shared vision provides a compass to keep learning on course when stress develops”, Senge says.  In addition, “The gap between vision and current reality is also a source of energy.  If there were no gap, there would be no need for any action to move towards the vision”.  The gap created is referred to creative tension and it is this, which can create a degree of positive chaos on a temporary basis whilst order is being restored and directed towards achieving the shared vision.

Over the coming months, we will share our active research activities into this relationship between ambiguity, complexity and effective communication …. and organisational culture; our specific focus is exploring how they can be used to positively influence critical activities like governance, risk and compliance … by winning those “hearts and minds” that are so important for making sure the right things happen, at the right time and in the right place!