Ethics in risk management Specialist event

"Ethics in Risk Management" was the title of the 40th specialist event of the Risk Management Network, which was held jointly with SwissFea (Swiss Financial Experts Association) and took place on 22 November at the Hochschule für Wirtschaft in Zurich. A good 50 participants listened to two exciting presentations that took very different approaches to the question of the extent to which ethical conflicts harbour corporate risks and what conclusions can be drawn from this with a view to a more conscious approach to "values".

As an introduction to the first paper, the case of the Shell Group, which decided in 1995, in agreement with the competent British authority commission, to sell its decommissioned offshore tank Brent Spar in the North Sea. The decisive factors were cost and legality. The fact that "legal" does not also mean "legitimate" became apparent when parts of civil society regarded this procedure as ecologically reckless and calls for a boycott became increasingly popular. Shell had recognized the conflict of values with the public too late and, in order to avert further damage to its image, finally had to dispose of the tank farm on land.

Olivier Gut, Managing Partner and co-founder of the start-up Absolutum AG, states that different ethical views are to be understood as value conflicts that can manifest themselves between a company and its social environment, but also within the company itself. They harbour reputational and compliance risks that are often difficult to identify. This is where the strategy tool ASER (Assessment System for Ethical Risk) comes in: It enables corporate management to identify potential value conflicts and to manage them in a targeted manner. Developed in cooperation with Innosuisse, the University of Basel and KPT as a pilot partner, three value profiles are determined using a sophisticated methodology:

1. strategic: what do we stand for?

2. operational: how do we act?

3. social: what does the social environment expect?

Differences between the profiles provide indications of company-specific

The tool identifies areas of tension and enables a systematic examination of the value risks that arise from them. The tool thus expands the risk management process (identification), but it also supports value management in other areas of application (e.g. in personnel recruitment or organizational and strategic development). It is hardly surprising that such new management aids are sometimes met with scepticism by company management. Andreas Luginbühl, Head of Assurance Function and member of the management of the health insurance company KPT, impressively describes the development and introduction of ASER at KPT using a variety of examples - from the academic-abstract concept to an experimental prototype to the practicable tool that was used for the first time in the board strategy process in 2017.

Ethics and compliance?

From a clearly different, fundamental and holistic perspective, Rudolf X. Ruter, independent auditor and management consultant (corporate governance, sustainability, taxes), analysed the relationship between ethics, corporate risks and value management in his second presentation. In his view, the focus of successful corporate management is not on sophisticated management techniques, but on the manager himself. The personal value compass, anchored in one's own conscience, keeps them on course and forms the foundation of any sustainable leadership: "With two grams of personality, you outweigh a thousand grams of expertise," says Ruter.

For this reason, compliance systems can only inadequately prevent misconduct as long as they are not supported by a positive code of values at the top management level. In this sense, effective value management requires first and foremost that a company's guiding values be broken down to the various management levels and tasks, starting with the board of directors as guarantors. As a reference for such a code of values, Ruter takes a measure of the core virtues of a company. reputable Leadership that is spelled out - as a mnemonic, so to speak - with honesty, poise, backbone, prudence, esteem and respect. Or in English: "Leadership is doing what is right when no one is watching".

Are these two approaches controversial, complementary or even incomparable? In any case, the following always provides plenty of material for discussion Risk management network