HBR; Synopsis, Simple Ethics Rules for Risk Management.

Simple Ethics Rules for Risk Management – HBR

I take it that there is a reason that since ancient times many a philosopher has written on the proper ethical conduct. The importance of ethics in today’s work environment is of paramount importance. In this blog post, I provide the synopsis to an article from Harvard Business Review relating to Business Ethics.

The article – Simple Ethics Rules for Risk Management, explores the important relationship between Ethics and Risk Management. The article informs us that there is a shift in risk management techniques and that risk managers are promoting ethical leadership and value-based decision making.

The article further explores a few recent case studies pertaining to recent failures in large organizations.

  1. Yahoo is mentioned with it’s cyber breach effecting 500 million records.
  2. Wells Fargo for creating thousands of fake customer accounts.
  3. The Volkswagon Emission scandals.

The lesson that has emerged from these scandals is that complex organization fail in complex ways.

The Senior Leaders should then focus on equipping individuals, with a common level of risk awareness, codes of conduct and value systems. 

What this approach does is then equip individuals and helps in preventing ethical misconduct.

The author of the article informs us of a few maxims that he thinks are important to the conversation.

This approach of using maxims was put forward by Immanuel Kant – A german philosopher and for many the father of Deontology – (Ethics based on the notion of duty or what is right, or on rights themselves). – Oxford Reference.

The Maxims put forward by the author are as follows:

  1. Values matter most when they are least convenient
  2. Bad things happen in the dark.
  3. Privacy is a luxury.
  4. Remoteness breeds indifference.

Each of these maxims are applied to cases that have generated much media attention.

  1. The case of Tylenol and Johnson & Johnson in the 1980’s is an example of case where values mattered even though the companies financial position suffered.
  2. The Wells Fargo incident is an example of bad things happening in the dark, with the incentive plan given to the employees promoting unethical behavior and a lack of accountability and transparency.
  3. The recent Clinton email scandal, is an example of including information in emails that was susceptible to ridicule.
  4. The Citi Bank example from the housing crash is an example of where senior leadership were completed detached from the whistleblowers and this resulted in the bank having to pay millions in settlements.





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