Corporate Risk Lessons from Europe

If corporate directors have learned one thing from Europe’s volcano crisis, it’s that anything can happen and it probably will. That’s according to the Institute of Directors in Southern Africa (IoDSA).

An article on New Zealand’s Sunday Times website says that according to the IoDSA, people tend to ignore low probability, high impact events and refuse to accept that they ignore them.

IoDSA Executive Director Ansie Ramalho said boards of directors need to have “thorough top down and bottom up risk identification” in place, as well as risk governance and, in many cases, an overhaul of risk management processes.

“It’s also very important for the board to determine its risk tolerance, as well as to determine in assessing its appetite for risk what exactly it may cost the company in terms of lost opportunities,” says the article.

Most corporate directors probably didn’t expect volcanic ash to suddenly become their biggest business nightmare until it happened a few weeks ago, says the article. Not only were corporate directors caught off guard, but so were governments and airlines.

To read the article, click here: