The Blind Spot

The Blind Spot

Much has been written about the nature of risk in the sector as a result of some high-profile problems that have made front page news in the trade press. The Regulator certainly has risk very high up on the agenda.

Ensuing discussions have covered boards and their skills, the undue complexity of some organisational arrangements, exposure to unfamiliar commercial risk and, of course, the actual process of managing risk itself. All of the above will have consumed significant amounts of board and executive time, and resulted in major revisions to risk strategies, maps, registers and databases, and enhanced learning and development plans for many a board member. All well and good.

However, there might be one more addition to every organisation’s risk register: the lack of awareness that decision-making is poor, with a board operating in ‘unconscious incompetence’ mode.

By definition, the risk of ‘unconscious incompetence’ is high, and recent events have shown that its incidence is a lot higher than anybody had previously expected.

Admittedly, there are a standard set of controls that can minimise the risk – independent governance reviews, compliance checks against the agreed code of governance, board appraisal frameworks etc. – but for a board that is already in unconscious incompetence mode, these are likely to be insufficient. Sleepwalking into a governance downgrade is on the cards.

Mark Sweeny, Senior Consultant. Mark, who works in our Strategy and Governance Team, can be contacted on 07887 512165 and mark.sweeny@altairltd.co.uk