I have shared this story before and I just have to share it again as I told it no fewer than six times this week in various presentations and training programs. It is the story of David Thodey, when still CEO of Telstra. He was be interviewed at a UNSW Business School seminar by Narelle Hooper, then Editor of AFR BOSS. Hooper asked a question along these lines: ‘What is the greatest challenge in running an organisation the size of Telstra?’ (which then had over 45,000 employees). Thodey answered (in my words):
Getting information I need to know about, from the extremities of the organisation to me, past all the information people are trying to tell me about that I don’t need to know, in time for me to do something about it!
I tell my audience this is what a great enterprise risk management approach to business delivers. It ensures both good and not so good news, gets to those who need to know, to make the best decisions possible. To his credit, Thodey split risk from audit at Telstra and beefed up the team to help the business make better decisions. He doubled the value of Telstra in his time there, however, I’ll leave others to pontificate as to his legacy from his time as CEO.
The takeaway from this is, in designing your risk framework, you MUST ensure performance and risk reporting are fully integrated. Otherwise, good news flows quickly, bad news flows poorly, is “massaged” along the way or is suppressed.
You can read more on this in Chapter 5 The End Game from my book Risky Business: How Successful Organisations Embrace Uncertainty.