Working Paper | HBS Working Paper Series | 2013

How Do Risk Managers Become Influential? A Field Study in Two Financial Institutions

by Matthew Hall, Anette Mikes and Yuval Millo

Abstract

This paper, based on a five-year longitudinal study at two UK-based banks, documents and analyzes the practices used by risk managers as they aim to gather and establish influence in their organizations. Specifically, we examine how influence-seeking risk managers (1) establish and maintain interpersonal connections with decision makers; and how they (2) adopt, deploy and reconfigure tools – practices that we define collectively as toolmaking. Using prior literature and our empirical observations, we distinguish between influence activities to which toolmaking was not central, and those to which toolmaking was important. As for the influence activities which imply toolmaking, we can outline the contours of three modes of operation, which describe experts operating as Compliance Experts, Engaged Toolmakers or Technical Champions, depending on the communicability of the tools and on the extent to which the experts are involved in practices related to those tools. Our study contributes to the accounting and management literature on influence-gathering, underlining that toolmaking plays a vital role in explaining how functional experts may compete in the intraorganizational marketplace for influential ideas and the attention of decision makers. Specifically, as risk management becomes more tool-driven and toolmaking may become more prevalent, our study provides a more nuanced understanding of the nature and consequences of risk managers' influence activities. An explicit focus on toolmaking extends accounting research that has hitherto focused attention on the structural arrangements and interpersonal connections when explaining the emergence of the influential financial expert.

Keywords: Experience and Expertise; Decision Making; Risk Management; Strategic Planning; Power and Influence; Business Strategy; Banking Industry;

Citation:

Hall, Matthew, Anette Mikes, and Yuval Millo. "How Do Risk Managers Become Influential? A Field Study in Two Financial Institutions." Harvard Business School Working Paper, No. 11-068, January 2011. (Revised October 2013.)