Taking a whole-of-organisation approach to risk management

CORPORATE governance, or at least the risk and compliance management side of it, is increasingly becoming a whole-of-organisation task.

WA energy producer Woodside has taken the unusual step of creating a general manager of corporate governance and human resources – highlighting the need to marry the two.

Woodside stalwart Jeff Snyder holds that position but will hand it to Malcolm Sandman in May.

WA-based conglomerate Wesfarmers fosters a culture that encourages its staff to be entrepreneurial, while still demanding strict corporate discipline.

PricewaterhouseCoopers global risk partner Simon Ford believes companies should foster a culture of risk management.

“A lot of companies don’t have a risk management framework. They don’t understand the risks they face,” Mr Ford said.

“With risk management you’re saying, ‘this is our corporate strategy and these are our key objectives’. Whatever will stop us meeting those objectives are the risks.

“Then you need to know what risk mitigation strategies need to be put in place to alleviate those risks.

“But you can’t afford to be too risk averse. Without risk the company can’t make money.”

Woodside general manager external affairs Erica Smyth said the dual role of corporate governance and human resources came from the company’s view that it needed to focus on “big picture” HR.

“Corporate governance is largely about risk management and one of the keys to risk management is having the right people in the right jobs,” Ms Smyth said.

“We want to have a broader culture of risk management throughout the organisation.

“We felt we needed to tighten up on the management of our non-physical risks. These are intangible things such as reputation and financial and people risks.

“Our physical risk management side is pretty well covered but we felt we needed to do some more work on the other side.”

Australian Institute of Company Directors WA chapter president Peter Mansell said corporate governance, as its name suggested, should be the focus of a company’s board.

“But if you talk about risk and compliance management it should be a whole-of-organisation approach,” he said.

Mr Mansell said Australia’s corporate governance standards were ahead of most other countries’ but recent events such as HIH and Harris Scarfe had given companies a “wake up call”.

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