Anette Mikes
Assistant Professor of Business Administration
Anette Mikes is an assistant professor in the Accounting & Management Unit. She teaches Financial Reporting and Control and in 2010 launched (with Professor Robert Kaplan) the new executive education program Risk Management for Corporate Leaders. She received a Ph.D. from the London School of Economics (LSE), where her dissertation, “Enterprise Risk Management in Action,” was the first field-based research study on risk management in financial institutions. Her subsequent publication "Risk Management and Calculative Cultures" won the 2009 David Solomons Prize.
She also holds an M.Sc. in economics and finance from the Budapest University of Economics and an M.Sc. in accounting and finance, with distinction, from LSE. During her doctoral studies, Professor Mikes was a tutorial fellow at LSE and an executive education associate at London Business School.
A former advisor to the Group Risk function at Standard Chartered Bank, between 2007-2010, Professor Mikes instigated and directed the CRO Futures Research Initiative in the United Kingdom. With the cooperation of a number of senior risk officers contributing to the British Bankers’ Association’s Risk Advisory Panel, this research program investigated evolving directions in risk management and the emerging roles of senior risk officers. Professor Mikes also studies risk management practices in high-risk nonfinancial organizations, such as the Canadian energy company Hydro One and the Mars Program at NASA’s Jet Propulsion Laboratory. Beyond research and teaching, she enjoys literature, the performing arts, swimming, and sailing.
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Article
| Risk & Regulation
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The Struggle to Codify Risk Management
Anette Mikes
Keywords: Risk Management;
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Article
| Harvard Business Review
|
Managing Risks: A New Framework
Robert S. Kaplan and Anette Mikes
Risk management is too often treated as a compliance issue that can be solved by drawing up lots of rules and making sure that all employees follow them. Many such rules, of course, are sensible and do reduce some risks that could severely damage a company. But rules-based risk management will not diminish either the likelihood or the impact of a disaster, such as Deepwater Horizon, just as it did not prevent the failure of many financial institutions during the 2007–2008 credit crisis. In this article, Robert S. Kaplan and Anette Mikes present a categorization of risk that allows executives to understand the qualitative distinctions between the types of risks that organizations face. Preventable risks, arising from within the organization, are controllable and ought to be eliminated or avoided. Examples are the risks from employees' and managers' unauthorized, unethical, or inappropriate actions and the risks from breakdowns in routine operational processes. Strategy risks are those a company voluntarily assumes in order to generate superior returns from its strategy. External risks arise from events outside the company and are beyond its influence or control. Sources of these risks include natural and political disasters and major macroeconomic shifts. Risk events from any category can be fatal to a company's strategy and even to its survival. Companies should tailor their risk management processes to these different risk categories. A rules-based approach is effective for managing preventable risks, whereas strategy risks require a fundamentally different approach based on open and explicit risk discussions. To anticipate and mitigate the impact of major external risks, companies can call on tools such as war gaming and scenario analysis.
Keywords: Risk Management;
Governance Controls;
Corporate Strategy;
Management Analysis, Tools, and Techniques;
Framework;
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Book Review
| Accounting Review
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Review of 'Accounting in Networks'
Anette Mikes
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Article
| Balanced Scorecard Report
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Managing the Multiple Dimensions of Risk-Part II: The Office of Risk Management
Anette Mikes and Robert S. Kaplan
In the second article of our two-part series, we explore the concept of an Office of Risk Management along with a case study of an innovative risk management function at JP Morgan Private Bank. We also look at the "softer" components of risk management, including a comparison of two different, equally effective risk officer styles and roles.
Keywords: Banks and Banking;
Innovation and Invention;
Management Style;
Managerial Roles;
Risk Management;
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Article
| Balanced Scorecard Report
|
Managing the Multiple Dimensions of Risk: Part I
Robert S. Kaplan and Anette Mikes
Based on an extensive program of case-writing and teaching on risk management, we identify three categories of risk and elaborate on the ways companies can identify and mitigate them, with particular emphasis on strategy execution risks.
Keywords: Risk Management;
Risk and Uncertainty;
Strategy;
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Article
| FS Focus
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Stepping into the Unknown: How Companies Learn through Risk Management
Anette Mikes
Risk management can add value through the continuous questioning of existing controls, strategies, and scenarios. The article outlines a new framework for risk management predicated on the notion of organizational learning, and illustrates it by a case study of a company that combined the strengths of a tripartite risk management function, deploying both independent and embedded risk managers.
Keywords: Learning;
Framework;
Governance Controls;
Risk Management;
Organizational Change and Adaptation;
Citation: Mikes, Anette. "Stepping into the Unknown: How Companies Learn through Risk Management." FS Focus 50 (June 2011): 22–25.
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Article
| Accounting, Organizations and Society
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From Counting Risk to Making Risk Count: Boundary-Work in Risk Management
Anette Mikes
For two decades, risk management has been gaining ground in banking. In light of the recent financial crisis, several commentators concluded that the continuing expansion of risk measurement is dysfunctional (Power, 2009; Taleb, 2007). This paper asks whether the expansion of measurement-based risk management in banking is as inevitable and as dangerous as Power and others speculate. Based on two detailed case studies and 53 additional interviews with risk-management staff at five other major banks over 2001-2010, this paper shows that relentless risk measurement is contingent on what I call the "calculative culture" (Mikes, 2009a). While the risk functions of some organizations have a culture of quantitative enthusiasm and are dedicated to risk measurement, others, with a culture of quantitative scepticism, take a different path, focusing instead on risk envisionment, aiming to provide top management with alternative future scenarios and with expert opinions on emerging risk issues. In order to explain the dynamics of these alternative plots, I show that risk experts engage in various kinds of boundary-work (Gieryn, 1983, 1999), sometimes to expand and sometimes to limit areas of activity, legitimacy, authority, and responsibility.
Keywords: Risk Management;
Banks and Banking;
Financial Crisis;
Expansion;
Organizational Culture;
Management Teams;
Managerial Roles;
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Journal Article
| Harvard Business Review
|
Managing Risk in the New World
Robert S. Kaplan, Anette Mikes, Robert Simons, Peter Tufano and Michael Hofmann Jr.
Five experts gathered recently to discuss the future of enterprise risk management: Kaplan, the Baker Foundation Professor at Harvard Business School, who with his colleague David Norton developed the balanced scorecard; Mikes, an assistant professor at HBS who studies the evolution of risk management and the role of the chief risk officer; Simons, the Charles M. Williams Professor of Business Administration at HBS; Tufano, the Sylvan C . Coleman Professor of Financial Management at HBS; and Hofmann, the chief risk officer at Koch Industries. The panel was moderated by HBR senior editor David Champion. Among the questions they addressed were: How predictable was the financial meltdown of 2008-2009? Did new tools for assessing risk give a false sense of security? How do the challenges facing industrial companies differ from those facing the financial sector? Is outsourcing an effective risk-management tool? Have capital structures become a bit too efficient in many companies? What makes a good chief risk officer? Of all the management tasks that were bungled in the period leading up to the global recession of 2008--2009, none was bungled more egregiously than the management of risk. This HBR Spotlight attempts to untangle the reasons that major systemic failures occurred, and to pin down some lessons for leaders and managers in the future.
Keywords: Forecasting and Prediction;
Financial Crisis;
Capital Structure;
Job Cuts and Outsourcing;
Risk Management;
Citation: Kaplan, Robert S., Anette Mikes, Robert Simons, Peter Tufano, and Michael Hofmann Jr. " Managing Risk in the New World." Harvard Business Review 87, no. 10 (October 2009): 68–75.
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Article
| Management Accounting Research
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Risk Management and Calculative Cultures
Anette Mikes
Enterprise risk management (ERM) has recently emerged as a widespread practice in financial institutions. It has been increasingly codified and encrypted into regulatory, corporate governance and organisational management blueprints. A burgeoning literature of regulatory and practitioner texts is indicative of the apparent diversity of ambitions, objectives and techniques that constitute the ERM agenda. Making sense of these developments is a challenge. This paper presents field-based evidence from two large banking organisations suggesting that systematic variations in ERM practices exist in the financial services industry. The cases illustrate four risk management ideal types and show how they form the ‘risk management mix' in a given organisation. Further, drawing on the literature of the roles and uses of management control systems (MCS), the paper explores how ERM achieved organisational significance in the studied settings. The findings are indicative of the current co-existence of alternative models of ERM. In particular, two types of ERM models are postulated: one driven by a strong shareholder value imperative (ERM by the numbers), the other corresponding to the demands of the risk-based internal control imperative (holistic ERM). This paper explains the differences in the two risk management mixes pointing towards alternative logics of calculation (Power, 2007), which I conceptualise and describe as different calculative cultures. The study suggests that calculative cultures, which in these cases shaped managerial predilections towards ERM practices, are relevant, albeit so far neglected, constituents of the fit between MCS and organizational contexts. Keywords: Risk Management;
Practice;
Banks and Banking;
Corporate Governance;
Value;
Business and Shareholder Relations;
Managerial Roles;
Culture;
Governing Rules, Regulations, and Reforms;
Business or Company Management;
Financial Services Industry;
Citation: Mikes, Anette. " Risk Management and Calculative Cultures." Management Accounting Research 20, no. 1 (March 2009): 18–40. (Winner of David Solomons Prize For the best paper in each annual volume of Management Accounting Research presented by Chartered Institute of Management Accountants.)
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Article
| Journal of Risk Management in Financial Institutions
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Chief Risk Officers at Crunch Time: Compliance Champions or Business Partners?
Anette Mikes
Risk management departments in financial institutions have been undergoing major transformations. New regulatory requirements have raised the bar on compliance, and expanded the remit of risk management significantly. The compliance imperative requires banks to implement a firm-wide risk management framework complete with analytical models for the measurement and control of quantifiable risks. In addition, recent corporate governance guidelines advocate the ‘business partner’ role of risk management. The COSO Enterprise Risk Management framework (2003) explicitly defines risk management as a high level, strategic activity, contributing to board level decision making, planning and performance management. This role requires that senior risk officers possess an understanding of key strategic uncertainties, and that they communicate these to senior management and the business lines. But how do senior risk officers strike a balance between the twin roles of ‘compliance champion’ and ‘business partner’? Too much reliance on the regulatory crutch may erode the credibility of the risk function as a business partner, while too much emphasis on the business advisory function might weaken its policing capability. In this paper I assess the roles that risk functions and, in particular, senior risk officers play in fifteen international banks. The research was carried out between June 2006 and June 2007, thus it offers a rare snapshot of the “calm before the storm” – the state of risk management at fifteen large players before the liquidity and credit crunch became apparent in the second half of 2007. The findings suggest that the role of chief risk officers (CROs) had expanded dramatically, with more than half of them frequently involved in firm-level strategic decisions. However, various compliance and risk modeling initiatives were still work-in-progress in the majority of these large international banks at the onset of the market turmoil. CROs voiced divergent views on the uses, benefits and limitations of risk models, suggesting that they promoted different ‘calculative cultures’ (‘quantitative enthusiasm’ versus ‘quantitative skepticism’). Fostering alternative calculative cultures, strategically involved CROs interpreted the ‘business partner’ role of their function in different ways. Some risk functions aspired for an influential expert voice in key business decisions (the risk function as ‘Strategic Advisor’), while others strived for the formal integration of risk management with performance management (the risk function as ‘Strategic Controller’). The achievement of the Strategic Advisor role in some banks and the Strategic Controller role in others, calls for a clarification of stakeholder expectations on risk management. This would reduce the danger of an expectations gap opening around particular risk management approaches that are adequate for certain banks but remain ill-suited for others. Keywords: Banks and Banking;
Corporate Governance;
Governance Compliance;
Governing Rules, Regulations, and Reforms;
Managerial Roles;
Risk Management;
Partners and Partnerships;
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Article
| GARP Risk Review
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Beyond Compliance: The Maturation of CROs and Other Senior Risk Executives
Anette Mikes
Keywords: Management;
Risk and Uncertainty;
Citation: Mikes, Anette. "Beyond Compliance: The Maturation of CROs and Other Senior Risk Executives." GARP Risk Review, no. 39 (November–December 2007): 12–18.
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Article
| Critical Perspectives on Accounting
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The Future of Interpretive Accounting Research: A Polyphonic Debate
Anette Mikes, Thomas Ahrens, Albrecht Becker, John Burns, Christopher Chapman, Markus Granlund, Michael Habersam, Allan Hansen, Rihab Khalifa, Teemu Malmi, Andrea Mennicken, Fabrizio Panozzo, Martin Piber, Paolo Quattrone and Tobias Scheytt
Keywords: Accounting;
Research;
Communication;
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Article
| International Journal of Risk Assessment and Management
|
Convictions, Conventions and the Operational Risk Maze—The Cases of Three Financial Services Institutions
Anette Mikes
Making sense of operational risk practices in the financial services sector is a challenge. There is a temptation to explain the wide variety of approaches as a characteristic of the early stage of development in which the genre resides.Based on the evidence of three case studies, this paper explores the mechanisms that guide firms in their choice of operational risk methodologies. First, drawing on Power (2003a)'s notion of calculative cultures, we propose that senior risk officers develop "personal philosophies" about the "manageability" of risks. Second, we emphasise the role of institutionalised rules and conventions (Meyer and Rowan, 1977) in the selection and use of operational risk practices. The paper explicates a number of conventions that are being institutionalised in the operational risk area. The case studies draw attention to the conflicts between the demands of these multiple conventions, and how organisations struggle to resolve them.
Keywords: Management Practices and Processes;
Risk Management;
Governing Rules, Regulations, and Reforms;
Conflict and Resolution;
Organizations;
Financial Services Industry;
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Chapter
| Enterprise Risk Management: Today's Leading Research and Best Practices for Tomorrow's Executives
| 2009
Becoming the Lamp Bearer: The Emerging Roles of the Chief Risk Officer
Anette Mikes
Enterprise risk management, under the leadership of chief risk officers (CROs), has the promise to bring enterprise-wide risks, which threaten the achievement of the firm's strategic objectives, into the open and under control. Its organizational significance is that, by providing a process to identify, measure, monitor, and manage uncertainty in strategic decision-making, strategic planning, performance management, and deal-approval processes, it enables top management to maintain or alter patterns in risk-taking. This chapter addresses the question: How may CROs realize that organizational significance? I draw on the existing practitioner and academic literature on the role of CROs and on a number of case studies from my ongoing research program on the evolution of the role of the CRO. I outline and illustrate four major roles that senior risk officers may fulfill: compliance champion, modeling expert, strategic controller, and strategic advisor and discuss the contingencies that shape the mix and effectiveness of these roles in actual organizational settings.
Keywords: Governance Controls;
Managerial Roles;
Risk Management;
Business Processes;
Risk and Uncertainty;
Citation: Mikes, Anette. "Becoming the Lamp Bearer: The Emerging Roles of the Chief Risk Officer." Chap. 5 in Enterprise Risk Management: Today's Leading Research and Best Practices for Tomorrow's Executives, edited by John Fraser, and Betty Simkins. John Wiley & Sons, 2009.
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Working Paper
| HBS Working Paper Series
| 2013
Managing Risks: Towards a Contingency Theory of Enterprise Risk Management
Anette Mikes and Robert Kaplan
Enterprise Risk Management (ERM) has become a crucial component of contemporary corporate governance reforms. Now that principles, guidelines, and standards abound, it is time to take stock. Has the idea of ERM reached maturity with proven, unambiguous concepts and tools? Or is it still emerging and unproven? Or can it be simply taken for granted, its value "proven" by the apparent demand?
This paper portrays ERM as an evolving discipline, and presents empirical findings from academic papers and our own field research on its current state of maturity. The academic studies explore factors that influence the adoption and impact of ERM but have produced few significant results because of an inadequate and insufficiently specified concept of ERM. Based on a ten-year field project, over 250 interviews with senior risk officers, and three detailed case studies in high reliability organizations, we propose a contingency framework for ERM, describing the emerging design parameters that help to explain the observable variation in the "ERM mix" adopted by organizations. We also propose a new contingent variable: the type of risk that the ERM practices address. We outline a "minimum necessary contingency framework" (Otley, 1980) that is sufficiently nuanced, yet observable to empirical researchers so that they may, in due course, hypothesize about "fit" between contingent variables, such as risk types and the ERM mix, as well as outcomes (organizational effectiveness).
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Working Paper
| HBS Working Paper Series
| 2013
How Do Risk Managers Become Influential? A Field Study in Two Financial Institutions
Matthew Hall, Anette Mikes and Yuval Millo
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;
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Working Paper
| HBS Working Paper Series
| 2013
The Appeal of the Appropriate: Accounting, Risk Management, and the Competition for the Supply of Control Systems
Anette Mikes
How do certain risk measurements in organizations come to be seen as more reliable and acceptable than others? Taking a multiple-control perspective, I investigate the aftermath of a control debacle at a financial services company (MultiBank), focusing on its insurance division (EurInsurance), which suffered large losses in the European insurance crisis of 2002-2003. At MultiBank, the insurance crisis opened up a field of contestability in which new control agents got the opportunity to become implicated in divisional control. The struggle for custody over divisional control was a micropolitical process of interprofessional competition, played out between accountants and risk controllers who promoted conflicting measures of the key strategic uncertainty, EurInsurance's capital adequacy. The control agents engaged in credentializing strategies (Power, 1992); they mobilized and drew on different cultural resources to construct the reliability of their techniques and to discredit and "minoritize" the others'. This credibility contest was won by the accountants who (unlike their opponents) were able to demonstrate the "institutional appropriateness" of their controls. Importantly, the fate of the competing control systems was contingent, not on how well their technologies addressed the problem of EurInsurance's capital adequacy, but rather on the controllers' capacity to generate top managerial acceptance and a widespread consensus among both internal and external stakeholders. The outcome of this type of professional competition is not determined by claims about representing the underlying economic reality, but by claims about representing those who care about it most. While competing controller groups have been observed to appeal to top management's logic of functionalism, this paper argues that, in certain circumstances, controller groups may successfully draw on the logic of appropriateness as they supply new control systems.
Keywords: Management Control Systems;
Multiple Control Systems;
Interactive Control Systems;
performance measurement;
risk management;
Risk Measurement;
Financialization of Accounting;
Institutional Logics;
fair value accounting;
Insurance;
banking;
Risk Management;
Fair Value Accounting;
Insurance;
Financial Services Industry;
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Working Paper
| HBS Working Paper Series
| 2011
From Counting Risk to Making Risk Count: Boundary-Work in Risk Management
Anette Mikes
For two decades, risk management has been gaining ground in banking. In light of the recent financial crisis, several commentators concluded that the continuing expansion of risk measurement is dysfunctional (Taleb, 2007; Power, 2009). This paper asks whether the expansion of measurement-based risk management in banking is as inevitable and as dangerous as Power and others speculate. Based on two detailed case studies and 53 additional interviews with risk-management staff at five other major banks from 2001 to 2010, this paper shows that relentless risk measurement is contingent on what I call the "calculative culture" (Mikes, 2009a). While the risk functions of some organizations have a culture of quantitative enthusiasm and are dedicated to risk measurement, others, with a culture of quantitative skepticism, take a different path, focusing instead on risk envisionment, aiming to provide top management with alternative future scenarios and with expert opinions on emerging risk issues. In order to explain the dynamics of these alternative plots, I show that risk experts engage in various kinds of boundary-work (Gieryn, 1983, 1999), sometimes to expand and sometimes to limit areas of activity, legitimacy, authority, and responsibility.
Keywords: Forecasting and Prediction;
Financial Crisis;
Risk Management;
Measurement and Metrics;
Organizational Culture;
Situation or Environment;
Banking Industry;
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Case
| HBS Case Collection
|
2012
The LEGO Group: Envisioning Risks in Asia
Anette Mikes and Dominique Hamel
On January 1, 2012, the LEGO Group announced a major new initiative to enhance its market penetration in Asia. Later in the year, a cross-functional group of senior managers gathered at company headquarters to discuss the status of the Asian initiative and the risks associated with it. The aim of the meeting was to outline four scenarios for the future that could help managers assess what key success factors and actions were required for coping with the challenges presented by each scenario and to prioritize them. Students will have an opportunity to enact the scenario exercise themselves, devising their own scenarios, and deciding whether the LEGO Group should build a factory in an Asian location in the next five to seven years. In order to facilitate a discussion about the challenges of designing a "winning organization," the case also presents difficult choices that executives had to make about the LEGO Group's strategy, choice of primary customers, core capabilities, and organizational structure.
Keywords: LEGO;
risk management;
toy industry;
fashion and creative industries;
Organizational Structure;
Risk Management;
Supply Chain Management;
Organizational Design;
Entertainment and Recreation Industry;
Denmark;
Asia;
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Case
| HBS Case Collection
|
2012
(Revised from original 2012 version)
Capitalizing for the Future: HSBC in 2010
Anette Mikes and Dominique Hamel
Following the financial crisis of 2007/2008, HSBC CEO Michael Geoghegan saw a fundamental change in global opportunities and risks. With increasing regulation and fierce competition between banks, the Western hemisphere was going to be a tougher place to do business. Emerging markets, however, offered many opportunities. Geoghegan reasoned that in HSBC's case, a turn to emerging markets would be a return to its roots and to managing risks that it knew. But HSBC needed to understand what the implications of the new strategy—"moving to emerging markets"—were for its portfolio and overall risk profile. Especially, how should HSBC reallocate capital freeing up in the West across its diverse geographies and business lines?
Keywords: accounting;
competitive strategy;
control systems;
finance;
Financial Crisis;
Banks and Banking;
Emerging Markets;
Risk Management;
Business Strategy;
Banking Industry;
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Supplement
| HBS Case Collection
|
2012
(Revised from original 2012 version)
Enterprise Risk Management at Hydro One (B): How Risky Are Smart Meters?
Anette Mikes and Dominique Hamel
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Case
| HBS Case Collection
|
2012
(Revised from original 2008 version)
Enterprise Risk Management at Hydro One (A)
Anette Mikes
An early adopter of Enterprise Risk Management, energy giant Hydro One anticipated new threats and opportunities in an industry that faced climate change and carbon legislation, the deregulation of electricity markets, and the greater adoption of renewable technologies. CEO Laura Formusa felt Hydro One's risk profile had shifted, to the extent that she had to ask herself-was the strategy tenable? The case provides a rich description of Enterprise Risk Management in action and shows how Hydro One executives arrive at a shared understanding of the risk profile of the company. In the narrative a diverse group of managers (the chief executive, the chief financial officer, the head of the public relations and the chief regulatory officer) voice their views on the risks, collectively bringing a multiple stakeholder perspective to the risk profile. The case challenges students to define the problems and risks that the company faces, given its strategic objectives, its evolving risk profile, and the changing environment. The case also offers a discussion ground for defining the role of the chief risk officer and the relationship between risk management, strategic planning and capital budgeting.
Keywords: Capital Budgeting;
Knowledge Sharing;
Managerial Roles;
Risk Management;
Strategic Planning;
Situation or Environment;
Environmental Sustainability;
Renewable Energy;
Energy Industry;
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Case
| HBS Case Collection
|
2012
(Revised from original 2009 version)
Risk Management at Wellfleet Bank: All That Glitters Is Not Gold
Anette Mikes
Inspired by one of the few banks that successfully weathered the 2007-2009 credit crisis, the case illustrates risk management in the world of corporate lending. Chief executive Alastair Dowes has to decide if the risk governance process is adequate to uncover mega-risks, based on reflections on the risk assessment and sanctioning of a $1 billion credit proposal. Students will be invited to assess and review the risks in the proposal and to arrive at a decision (whether Wellfleet should accept it or not). At the same time, students will learn that gray-area risk decisions and, in particular, risk-adjusted performance measurement can rarely be automated. Risk governance requires executives to strike a balance between risk modeling and qualitative business judgment-a holistic (rather than silo-based) view of risks.
Keywords: Decision Choices and Conditions;
Judgments;
Credit;
Banks and Banking;
Governance Controls;
Risk Management;
Mathematical Methods;
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Teaching Note
| HBS Case Collection
|
2012
(Revised from original 2011 version)
Risk Management at Wellfleet Bank: All That Glitters Is Not Gold (TN)
Anette Mikes
Teaching Note for 110011.
Keywords: Credit;
Risk Management;
Governance;
Performance Evaluation;
Banking Industry;
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Case
| HBS Case Collection
|
2011
(Revised from original 2011 version)
Lehman Brothers and Repo 105
Anette Mikes, Gwen Yu and Dominique Hamel
Citation: Mikes, Anette, Gwen Yu, and Dominique Hamel. " Lehman Brothers and Repo 105." Harvard Business School Case 112-050, December 2011. (Revised from original October 2011 version.)
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Background Note
| HBS Case Collection
|
2011
Auditing in the Post-Sarbanes-Oxley World
Anette Mikes, Gwen Yu and Dominique Hamel
Keywords: Accounting Audits;
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Case
| HBS Case Collection
|
2011
(Revised from original 2009 version)
Risk Management at Wellfleet Bank: Deciding about "Megadeals"
Anette Mikes
Inspired by one of the few banks that successfully weathered the 2007-2009 credit crisis, the case illustrates risk management in a corporate finance business. Chief executive Alastair Dowes has to decide if the risk governance process is adequate to uncover mega-risks in the portfolio, based on reflections on the risk assessment and sanctioning of two $1 bn credit proposals. Students will be invited to assess and review the risks in the two proposals, and to arrive at a decision (whether Wellfleet should accept them or not). At the same time, students will learn that gray-area risk decisions and, in particular, risk-adjusted performance measurement can rarely be automated. Risk governance requires executives to strike a balance between risk modeling and qualitative business judgment - a holistic (rather than silo-based) view of risks.
Keywords: Risk Management;
Decision Making;
Performance Evaluation;
Credit;
Balance and Stability;
Integrated Corporate Reporting;
Decision Choices and Conditions;
Negotiation Offer;
Performance Effectiveness;
Corporate Finance;
Banking Industry;
Citation: Mikes, Anette. Risk Management at Wellfleet Bank: Deciding about " Megadeals". Harvard Business School Case 109-071, May 2011. (Revised from original March 2009 version.)
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Teaching Note
| HBS Case Collection
|
2011
Risk Management at Wellfleet Bank: Deciding about "Megadeals" (TN)
Anette Mikes
Teaching Note for 109071.
Keywords: Banking Industry;
Citation: Mikes, Anette. Risk Management at Wellfleet Bank: Deciding about " Megadeals" (TN). Harvard Business School Teaching Note 111-138, May 2011.
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Case
| HBS Case Collection
|
2010
(Revised from original 2010 version)
J.P. Morgan Private Bank: Risk Management during the Financial Crisis 2008-2009
Anette Mikes, Clayton S. Rose and Aldo Sesia
Mary Erdoes, the CEO of JP Morgan's asset management business, and three colleagues provide insights into risk management issues faced by the firm's private bank during the financial crisis in 2008–2009. The case provides perspective on the philosophy with which they approach risk management, issues of greatest concern, tools and processes used in practice, the benefits and limitations of quantitative models and balance between the use of models and exercising judgment, and lessons learned from the crisis about risk management.
Keywords: Judgments;
Financial Crisis;
Globalized Firms and Management;
Management Analysis, Tools, and Techniques;
Risk Management;
Mathematical Methods;
Banking Industry;
United States;
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Teaching Note
| HBS Case Collection
|
2010
Enterprise Risk Management at Hydro One (TN)
Anette Mikes
Teaching Note for 109001.
Keywords: Risk Management;
Weather and Climate Change;
Adoption;
Perspective;
Business and Stakeholder Relations;
Goals and Objectives;
Strategic Planning;
Governing Rules, Regulations, and Reforms;
Renewable Energy;
Capital Budgeting;
Managerial Roles;
Problems and Challenges;
Energy Industry;
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Teaching Note
| HBS Case Collection
|
2010
(Revised from original 2010 version)
Jet Propulsion Laboratory (TN)
Anette Mikes
Teaching Note for 110031.
Citation: Mikes, Anette. " Jet Propulsion Laboratory (TN)." Harvard Business School Teaching Note 110-091, August 2010. (Revised from original June 2010 version.)
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Teaching Note
| HBS Case Collection
|
2010
Enterprise Risk Management at Hydro One (TN)
Anette Mikes
Teaching Note for 110707.
Keywords: SWOT Analysis;
Risk Management;
Weather and Climate Change;
Renewable Energy;
Technology Adoption;
Strategy;
Business and Stakeholder Relations;
Perspective;
Goals and Objectives;
Capital Budgeting;
Governing Rules, Regulations, and Reforms;
Energy Industry;
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Case
| HBS Case Collection
|
2010
Enterprise Risk Management at Hydro One (Multimedia)
Anette Mikes
An early adopter of Enterprise Risk Management, energy giant Hydro One anticipated new threats and opportunities in an industry that faced climate change and carbon legislation, the deregulation of electricity markets, and the greater adoption of renewable technologies. CEO Laura Formusa felt Hydro One's risk profile had shifted, to the extent that she had to ask herself - was the strategy tenable? The case provides a rich description of Enterprise Risk Management in action, and shows how Hydro One executives arrive at a shared understanding of the risk profile of the company. In the narrative a diverse group of managers (the chief executive, the chief financial offer, the head of the public relations and the chief regulatory officer) voice their views on the risks, collectively bringing a multiple stakeholder perspective to the risk profile. The case challenges students to define the problems and risks that the company faces, given its strategic objectives, its evolving risk profile, and the changing environment. The case also offers a discussion ground for defining the role of the chief risk officer, and the relationship between risk management, strategic planning and capital budgeting.
Keywords: Risk Management;
Energy;
Energy Industry;
Canada;
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Case
| HBS Case Collection
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2010
(Revised from original 2010 version)
Jet Propulsion Laboratory
Robert S. Kaplan and Anette Mikes
The case, in a non-profit project-oriented setting, introduces fundamental risk management principles and processes that are easily applicable to private sector settings. Gentry Lee, senior systems engineer and de-facto chief risk officer, is applying a new comprehensive risk management system to a $600 million high-profile Mars landing mission. The case illustrates JPL's risk culture for high-visibility and expensive missions in the post-Challenger era with tightly constrained budgets. It introduces risk analytics, such as heat maps, and the management process and governance system centered around continuous challenge and "intellectual confrontation." Students will consider JPL's strategy and constraints, measurable technical risks, non-measurable external risks, and societal pressures in making a decision about whether to launch or delay the Mars mission launch. The case calls for an appreciation of the role of the chief risk officer, and of leadership in general, in risk management.
Keywords: Budgets and Budgeting;
Governance;
Leadership;
Management Practices and Processes;
Management Systems;
Risk Management;
Projects;
Aerospace Industry;
United States;
Citation: Kaplan, Robert S., and Anette Mikes. " Jet Propulsion Laboratory." Harvard Business School Case 110-031, May 2010. (Revised from original February 2010 version.)
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Supplement
| HBS Case Collection
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2009
The World Food Programme during the Global Food Crisis (B)
Anette Mikes, Peter Tufano, Eric D. Werker and Jan-Emmanuel De Neve
Keywords: Crisis Management;
Food;
Non-Governmental Organizations;
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Case
| HBS Case Collection
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2009
(Revised from original 2008 version)
The World Food Programme during the Global Food Crisis (A)
Anette Mikes, Peter Tufano, Eric D. Werker and Jan-Emmanuel De Neve
Rising food prices threatened an unprecedented number of people around the world with malnutrition or starvation in 2008. The new Executive Director of the United Nations' World Food Programme (WFP)—the world's largest food relief agency—must not only address this challenge but also must rethink the WFP's strategy in the rapidly changing world of humanitarian assistance.
Keywords: Food;
Globalized Firms and Management;
Nutrition;
Crisis Management;
Business and Government Relations;
Nonprofit Organizations;
Welfare or Wellbeing;
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Conference Presentation
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12
Jan
2013
Accounting and Risk Management, and Interactive Control Selection: Which, When and Why?
Anette Mikes
Citation: Mikes, Anette. "Accounting and Risk Management, and Interactive Control Selection: Which, When and Why?" Paper presented at the American Accounting Association, Management Accounting Section Research and Case Conference, American Accounting Association, New Orleans, LA, United States, January 12, 2013.
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Conference Presentation
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19
Nov
2012
Accounting and Risk Management, and Interactive Control Selection: Which, When and Why?
Anette Mikes
Citation: Mikes, Anette. "Accounting and Risk Management, and Interactive Control Selection: Which, When and Why?" Paper presented at the Copenhagen Business School Seminar, Copenhagen Business School, Copenhagen, Denmark, November 19, 2012.
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Conference Presentation
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26
Oct
2012
How Do Risk Managers Become Influential? A Field Study of Toolmaking and Expertise in Two Financial Institutions
Anette Mikes
Citation: Mikes, Anette. "How Do Risk Managers Become Influential? A Field Study of Toolmaking and Expertise in Two Financial Institutions." Paper presented at the Contemporary Accounting Research Conference, Canadian Academic Accounting Association, Ottawa, Canada, October 26, 2012.
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Conference Presentation
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28
Sep
2012
Accounting and Risk Management, and Interactive Control Selection: Which, When and Why?
Anette Mikes
Citation: Mikes, Anette. "Accounting and Risk Management, and Interactive Control Selection: Which, When and Why?" Paper presented at the Accounting Seminar (University of Central Florida), University of Central Florida, Orlando, FL, September 28, 2012.
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Conference Presentation
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21
Jun
2012
How Do Risk Managers Become Influential? A Field Study of Toolmaking and Expertise in Two Financial Institutions
Anette Mikes
Citation: Mikes, Anette. "How Do Risk Managers Become Influential? A Field Study of Toolmaking and Expertise in Two Financial Institutions." Paper presented at the Global Management Accounting Research Symposium, Copenhagen, Denmark, June 21, 2012.
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Talk
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20
Jun
2012
Case Teaching Seminar: Teaching Accounting with Case Studies
Anette Mikes
Citation: Mikes, Anette. "Case Teaching Seminar: Teaching Accounting with Case Studies." Stockholm School of Economics Seminar, Stockholm, Sweden, June 20, 2012.
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Conference Presentation
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18
Jun
2012
Accounting and Risk Management, and Interactive Control Selection: Which, When and Why?
Anette Mikes
Citation: Mikes, Anette. "Accounting and Risk Management, and Interactive Control Selection: Which, When and Why?" Paper presented at the Stockholm School of Economics Seminar, Stockholm School of Economics, Stockholm, Sweden, June 18, 2012.
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Conference Presentation
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7
Jun
2012
How Do Risk Managers Become Influential? A Field Study of Toolmaking and Expertise in Two Financial Institutions
Anette Mikes
Citation: Mikes, Anette. "How Do Risk Managers Become Influential? A Field Study of Toolmaking and Expertise in Two Financial Institutions." Paper presented at the Information, Markets, and Organizations Conference, Harvard Business School, Boston, MA, June 7, 2012.
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Conference Presentation
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19
Apr
2012
Risk Management, Accounting and the Aftermath of a Control Debacle
Anette Mikes
Citation: Mikes, Anette. "Risk Management, Accounting and the Aftermath of a Control Debacle." Paper presented at the Management Accounting as Social and Organizational Practice, London School of Economics and Political Science, London, UK, April 19, 2012.
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Conference Presentation
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08
Apr
2011
Assessing Risk and Uncertainty
Anette Mikes
Keywords: Risk and Uncertainty;
Citation: Mikes, Anette. "Assessing Risk and Uncertainty." Paper presented at the CARE/CESEA Conference on Accounting for Uncertainty and Risk, April 08, 2011.
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Conference Presentation
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31
Mar
2011
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1
Apr
2011
Organizational Toolmaking: Transformations in the Influence of Experts
Anette Mikes
Keywords: Organizations;
Power and Influence;
Transformation;
Citation: Mikes, Anette. "Organizational Toolmaking: Transformations in the Influence of Experts." Paper presented at the Workshop on Management Accounting as a Social and Organizational Practice, Paris, France, March 31–April 1, 2011.
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Conference Presentation
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1
Mar
2011
From Counting Risk to Making Risk Count: Boundary-Work in Risk Management.
Anette Mikes
Keywords: Risk Management;
Citation: Mikes, Anette. "From Counting Risk to Making Risk Count: Boundary-Work in Risk Management." Wharton School, Business Economics and Public Policy Department, Insurance and Risk Management Program, March 1, 2011.
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Conference Presentation
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02
Nov
2010
Risk Management in High-reliability Organizations
Anette Mikes
Keywords: Risk Management;
Organizations;
Citation: Mikes, Anette. "Risk Management in High-reliability Organizations." Paper presented at the Johnson Space Center Innovation Seminar, November 02, 2010.
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Conference Presentation
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12
Jul
2010
Don't Stone the CROs! - The Evolving Role of the Chief Risk Officer
Anette Mikes
Keywords: Management Teams;
Citation: Mikes, Anette. "Don't Stone the CROs! - The Evolving Role of the Chief Risk Officer." Paper presented at the Financial Services Authority Risk Management Conference, July 12, 2010.
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Conference Presentation
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09
Jul
2010
Don't Stone the CROs! - The Evolving Role of the Chief Risk Officer
Anette Mikes
Keywords: Management Teams;
Citation: Mikes, Anette. "Don't Stone the CROs! - The Evolving Role of the Chief Risk Officer." Paper presented at the Risk Vision Seminar, London, July 09, 2010.
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Conference Presentation
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20
May
2010
Counting Risk and Making Risk Count: Metrological Dramas in Risk Management
Anette Mikes
Keywords: Risk Management;
Citation: Mikes, Anette. "Counting Risk and Making Risk Count: Metrological Dramas in Risk Management." Paper presented at the Social Studies of Finance Conference, Paris, May 20, 2010.
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Conference Presentation
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25
Mar
2010
Counting Risk and Making Risk Count: Metrological Dramas in Risk Management
Anette Mikes
Keywords: Risk Management;
Citation: Mikes, Anette. "Counting Risk and Making Risk Count: Metrological Dramas in Risk Management." Paper presented at the Workshop on Management Accounting as Social and Organizational Practice, March 25, 2010.
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Other Unpublished Work
| 2008
Accounting, Risk Management and the Aftermath of a Control Debacle
Anette Mikes
Despite the widespread adoption of risk management systems in the financial services industry, recent control debacles highlight the apparent lack of top managerial attention to risk controls. Yet in order to understand the workings and uses of risk controls (or any other control innovation), one needs to take a closer look at the multiple control package that accommodates these. Taking a multiple control perspective, this paper investigates a control debacle and its aftermath in a financial services company. The study unravels the workings of a set of accounting and risk controls, put in place to control the troubled insurance division of the group, and discusses how and why particular management control systems shift into (and out of) top managerial focus. The study investigates Simons' (1990, 1991) argument that it is top management's knowledge of key strategic uncertainties that motivates their choice of control systems to be used interactively. The case offers a two-step-theory to explain why top managers' choice of interactive controls changes over time. First, behind the various control systems there are active controller groups who, in competition for executive-level visibility, further their particular framing and solutions for organizational issues (agenda building). Second, top management's interactive use of a particular control system sends a signal to external stakeholders as well, about the internal control style and management priorities of the firm. Therefore, the control choice is motivated both by the relevance and the institutional appropriateness of particular controls. As external requirements change, and the definition of institutional appropriateness shifts as well, new organizational control groups get the opportunity to become implicated in interactive control and agenda setting. In the special case of conflicting control systems (when managers have to choose between alternative representations of the underlying firm performance) the selection becomes more complex, as the competing controller groups strive to demonstrate higher informational relevance and greater institutional appropriateness. In this case study institutional appropriateness was the stronger requirement—the lack of it prevented the otherwise informationally relevant risk control system from prevailing as an interactive control system.
Keywords: Accounting;
Governance Controls;
Management Systems;
Risk Management;
Conflict and Resolution;
Financial Services Industry;
Citation: Mikes, Anette. "Accounting, Risk Management and the Aftermath of a Control Debacle." 2008.
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Dissertation
| 2006
Enterprise Risk Management in Action
Anette Mikes
The new Basel regulatory initiatives and a burgeoning risk management literature signify the rise of enterprise risk management (ERM) in the financial services sector. However, very little is known of the roles that risk management plays in organizations and how it obtains organizational significance. This study, utilising case study material from seventy-five in-depth interviews with senior managers at two large banking groups, is a first step in exploring ERM in action. Apart from the field material, the study draws on the normative-practitioner literature of risk management, as well as on a long strand of organisationally grounded studies of management control. ERM appears to be an assembly of four risk management ideal types (Risk Silo Management, Integrated Risk Management, Risk and Value Management, Strategic Risk Management), all of which aspire to be ‘enterprise-wide’, and together constituting the ‘risk management mix’ in a given organisation. Three distinct types of risk managers emerged in both organisations, displaying characteristic aspirations and techniques (risk silo specialists, risk capital specialists, senior risk officers). The case study analysis compared and contrasted the observed two ERM assemblies, and emphasised the alternative patterns of organizational significance displayed by the risk management functions. In the first case (value-based ERM) risk management was integral to the formal planning and performance measurement process, while remained neutral in the discussions of discretionary strategic decisions. In the second case (strategic ERM) risk management was incidental to formal planning and control, however, senior risk officers exercised agenda-setting power to influence the discussion of key strategic uncertainties. The study explains the observations in terms of firm-specific factors and institutional pressures. The politics of risk control and the presence of different calculative cultures in the organisations were tampered by contemporary corporate governance imperatives, such as the shareholder-value drive and the risk-based internal control imperative.
Keywords: Banks and Banking;
Risk Management;
Practice;
Governance Controls;
Value;
Strategy;
Financial Services Industry;
Citation: Mikes, Anette. "Enterprise Risk Management in Action." Ph.D. diss., London School of Economics and Political Science, Centre for Economic Performance, 2006.
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Other Unpublished Work
| 2005
Enterprise Risk Management in Action
Anette Mikes
Keywords: Business Ventures;
Risk Management;
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