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.
 

Journal Articles

  1. How Experts Gain Influence

    In theory, the risk management groups of two British banks—Saxon and Anglo—had the same influence in their organizations. But in practice, they did not: Saxon's was engaged in critical work throughout the bank, while Anglo's had little visibility outside its areas of expertise. In their study of these two financial institutions, the authors identified four competencies—trailblazing, toolmaking, teamwork, and translation—that help functional leaders or groups compete for top management's limited attention and increase their impact. Anglo's risk managers were strong in only some of the competencies, but Saxon's were strong in all four. They consistently scanned the internal and external environment for important issues to which they could apply a risk management perspective (trailblazing) and then developed tools—such as quarterly risk reports—that spread their expertise (toolmaking). While controlling the tools' design and implementation, the risk managers incorporated business managers' insights (teamwork) and made sure everyone could understand the findings (translation). Ultimately, experts' roles must fit the organization's strategy and structural needs. In some situations, functional experts can raise their profile by cultivating just two of the competencies. But those who are strong in all four are likely to be the most influential.

    Keywords: Risk Management; Banking Industry;

    Citation:

    Mikes, Anette, Matthew Hall, and Yuval Millo. "How Experts Gain Influence." Harvard Business Review 91, nos. 7/8 (July–August 2013): 70–74. View Details
  2. The Struggle to Codify Risk Management

    Keywords: Risk Management;

    Citation:

    Mikes, Anette. "The Struggle to Codify Risk Management." Risk & Regulation, no. 24 (Winter 2012): 18–19. View Details
  3. Managing Risks: A New Framework

    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;

    Citation:

    Kaplan, Robert S., and Anette Mikes. "Managing Risks: A New Framework." Harvard Business Review 90, no. 6 (June 2012). View Details
  4. Review of 'Accounting in Networks'

    Citation:

    Mikes, Anette. "Review of 'Accounting in Networks'." Accounting Review 87, no. 1 (January 2012): 346–349. View Details
  5. Managing the Multiple Dimensions of Risk-Part II: The Office of Risk Management

    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;

    Citation:

    Mikes, Anette, and Robert S. Kaplan. "Managing the Multiple Dimensions of Risk-Part II: The Office of Risk Management." Balanced Scorecard Report 13, no. 5 (September–October 2011): 1–6. View Details
  6. Managing the Multiple Dimensions of Risk: Part I

    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;

    Citation:

    Kaplan, Robert S., and Anette Mikes. "Managing the Multiple Dimensions of Risk: Part I." Balanced Scorecard Report 13, no. 4 (July–August 2011): 1–6. View Details
  7. Stepping into the Unknown: How Companies Learn through Risk Management

    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. View Details
  8. From Counting Risk to Making Risk Count: Boundary-Work in Risk Management

    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;

    Citation:

    Mikes, Anette. "From Counting Risk to Making Risk Count: Boundary-Work in Risk Management." Accounting, Organizations and Society 36, nos. 4-5 (June 2011): 226–245. View Details
  9. Managing Risk in the New World

    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. View Details
  10. Risk Management and Calculative Cultures

    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​

    .) View Details
  11. Chief Risk Officers at Crunch Time: Compliance Champions or Business Partners?

    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;

    Citation:

    Mikes, Anette. "Chief Risk Officers at Crunch Time: Compliance Champions or Business Partners?" Journal of Risk Management in Financial Institutions 2, no. 1 (November–December 2008). View Details
  12. Beyond Compliance: The Maturation of CROs and Other Senior Risk Executives

    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. View Details
  13. The Future of Interpretive Accounting Research: A Polyphonic Debate

    Keywords: Accounting;

    Citation:

    Mikes, Anette, Thomas Ahrens, Albrecht Becker, John Burns, Christopher Chapman, Markus Granlund, Michael Habersam, et al. "The Future of Interpretive Accounting Research: A Polyphonic Debate." Critical Perspectives on Accounting (May 2007). View Details
  14. Convictions, Conventions and the Operational Risk Maze—The Cases of Three Financial Services Institutions

    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;

    Citation:

    Mikes, Anette. "Convictions, Conventions and the Operational Risk Maze—The Cases of Three Financial Services Institutions." International Journal of Risk Assessment and Management 7, no. 8 (2007): 1027–1056. View Details

Book Chapters

  1. Becoming the Lamp Bearer: The Emerging Roles of the Chief Risk Officer

    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. View Details

Working Papers

  1. Learning from the Kursk Submarine Rescue Failure: the Case for Pluralistic Risk Management

    The Kursk, a Russian nuclear‐powered submarine, sank in the relatively shallow waters of the Barents Sea in August 2000 during a naval exercise. Numerous survivors were reported to be awaiting rescue, and within a week, an international rescue party gathered at the scene, which had seemingly possessed all that was needed for a successful rescue. Yet they failed to save anybody. Drawing on the recollections and daily situational reports of Commodore David Russell, who headed the Royal Navy’s rescue mission, and on Robert Moore’s (2002) award-winning book A Time to Die: The Kursk Disaster, the paper explores how and why this failure—a multiparty coordination failure—occurred. The Kursk rescue mission also illustrates a key issue in multiparty risk and disaster management, namely that the organizational challenge is to enable multiple actors and subunits with competing and often conflicting values and expertise to establish a virtual, well‐aligned organization. Organizational structures that can resolve evaluative dissonance, and processes that enable such a resolution, have been proposed in various literatures. Attempting to synthesize relevant works on pluralistic control and collaborative heterarchies, this paper proposes the foundations of what might be called pluralistic risk management, and it examines its conditions of possibility, in light of the lessons of the Kursk submarine rescue failure.

    Citation:

    Mikes, Anette, and Amram Migdal. "Learning from the Kursk Submarine Rescue Failure: the Case for Pluralistic Risk Management." Harvard Business School Working Paper, No. 15-003, July 2014. View Details
  2. The Triumph of the Humble Chief Risk Officer

    This paper tracks the evolution of the role of two chief risk officers (CROs), and the tools and processes they have implemented in their respective organizations. While the companies are from very different industries (one is a power company, the other is a toy manufacturer), they both embraced the concepts and tools of Enterprise Risk Management. Over a number of years, at both firms, risk management transformed from a collection of "off-the-shelf", acquired tools and practices into a seemingly inevitable and tailored control process. The paper investigates the role of the CRO in making these transformations happen. The two cases highlight that the role of the CRO may be less about the packaging and marketing of risk management ideas to business managers, but instead, the facilitation of the creation and internalization of a specific type of "risk talk" as a legitimate, cross-functional language of business. Thereby the risk-management function may be most successful when it resists conventional and conflicting demands to be either close to, or independent from, business managers. Instead, by acting as a facilitator of risk talk the CRO can enable the real work of risk management to take place not in his own function, but in the business. In both cases, facilitation involved a significant degree of humility on the part of the CRO, manifest in limited formal authority and meagre resources. Their skill was to build an informal network of relationships with executives and business managers, which allowed them to resist being stereotyped as either compliance champions or business partners. Instead they created and shaped the perception of their role which was of their own making: a careful balancing act between keeping one's distance and staying involved.

    Keywords: Risk Management; Managerial Roles;

    Citation:

    Mikes, Anette. "The Triumph of the Humble Chief Risk Officer." Harvard Business School Working Paper, No. 14-114, May 2014. View Details
  3. Towards a Contingency Theory of Enterprise Risk Management

    Enterprise risk management (ERM) has become a crucial component of contemporary corporate governance reforms, with an abundance of principles, guidelines, and standards. This paper portrays ERM as an evolving discipline and presents empirical findings on its current state of maturity, as evidenced by a survey of the academic literature and by our own field research. Academics are increasingly examining the adoption and impact of ERM, but the studies are inconsistent and inconclusive, due, we believe, to an inadequate specification of how ERM is used in practice. Based on a ten-year field project, over 250 interviews with senior risk officers, and three detailed case studies, we put forward a contingency theory of ERM, identifying potential design parameters that can explain observable variation in the "ERM mix" adopted by organizations. We also add a new contingent variable: the type of risk that a specific ERM practice addresses. We outline a "minimum necessary contingency framework" (Otley, 1980) that is sufficiently nuanced, while still empirically observable, that empirical researchers may, in due course, hypothesize about "fit" between contingent variables, such as risk types and the ERM mix, as well as about outcomes such as organizational effectiveness.

    Keywords: Risk Management;

    Citation:

    Mikes, Anette, and Robert S. Kaplan. "Towards a Contingency Theory of Enterprise Risk Management." Harvard Business School Working Paper, No. 13-063, January 2013. (Revised January 2014.) View Details
  4. How Do Risk Managers Become Influential? A Field Study in Two Financial Institutions

    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.) View Details
  5. The Appeal of the Appropriate: Accounting, Risk Management, and the Competition for the Supply of Control Systems

    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;

    Citation:

    Mikes, Anette. "The Appeal of the Appropriate: Accounting, Risk Management, and the Competition for the Supply of Control Systems ." Harvard Business School Working Paper, No. 12-115, June 2012. (Revised January 2013.) View Details
  6. From Counting Risk to Making Risk Count: Boundary-Work in Risk Management

    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;

    Citation:

    Mikes, Anette. "From Counting Risk to Making Risk Count: Boundary-Work in Risk Management." Harvard Business School Working Paper, No. 11-069, January 2011. (Revised March 2011.) View Details

Cases and Teaching Materials

  1. Risk Management at Wellfleet Bank: Deciding about 'Megadeals'

    Teaching Note for 109071.

    Keywords: Banking Industry;

    Citation:

    Mikes, Anette. "Risk Management at Wellfleet Bank: Deciding about 'Megadeals'." Harvard Business School Teaching Note 114-085, March 2014. (Revised March 2014.) View Details
  2. Risk Management at Wellfleet Bank: All That Glitters Is Not Gold

    Teaching Note for 110011.

    Keywords: Credit; Risk Management; Governance; Performance Evaluation; Banking Industry;

    Citation:

    Mikes, Anette. "Risk Management at Wellfleet Bank: All That Glitters Is Not Gold." Harvard Business School Teaching Note 114-084, April 2014. (Revised April 2014.) View Details
  3. Lehman Brothers and Repo 105

    Citation:

    Mikes, Anette, and Gwen Yu. "Lehman Brothers and Repo 105." Harvard Business School Teaching Note 114-080, March 2014. (Revised March 2014.) View Details
  4. The LEGO Group: Envisioning Risks in Asia (A) and (B)

    Keywords: risk management; enterprise risk management; LEGO; LEGO Group; scenario planning;

    Citation:

    Mikes, Anette. "The LEGO Group: Envisioning Risks in Asia (A) and (B)." Harvard Business School Teaching Note 114-058, January 2014. (Revised March 2014.) View Details
  5. The Kursk Submarine Rescue Mission

    The Kursk, a Russian nuclear-powered submarine sank in the relatively shallow waters of the Barents Sea in August 2000, during a naval exercise. Numerous survivors were reported to be awaiting rescue, and within a week, an international rescue party gathered at the scene, which had possessed between them all that was needed for a successful rescue. Yet they failed to save anybody. Based on the recollections and daily situational reports of Commodore David Russell, who headed the Royal Navy's rescue mission, the case explores how and why this failure—a classic coordination failure—occurred. The Kursk rescue mission also illustrates the challenges of pluralistic risk and disaster management, and asks students to consider how to bring about solutions in the face of pluralistic risk issues, such as the depletion of natural resources and many other disasters, when multiple parties with competing and often conflicting values and expertise have to learn to coordinate and establish a virtual, well-aligned organization.

    Keywords: Risk Management; Moral Sensibility; Leadership; Organizational Structure; Crisis Management; Failure; Cooperation; Cross-Cultural and Cross-Border Issues; Norway; United Kingdom; Russia;

    Citation:

    Mikes, Anette. "The Kursk Submarine Rescue Mission." Harvard Business School Case 114-046, January 2014. (Revised June 2014.) View Details
  6. The LEGO Group: Envisioning Risks in Asia (B)

    This brief follow-up complements the case on The LEGO Group: Stepping Up in Asia (9-113-054), and discusses the aftermath of the scenario planning session, in which LEGO managers contemplated the risks of their new Asian strategy. The scenario planning exercise played a role in managers' realization that the Group could not simply "copy-paste" its existing operating model across the diversity of Asian markets. LEGO invested significantly in Asia throughout 2012-2013 in order to adapt its playbook to the anticipated challenges. The case also describes how, in 2013, scenario planning became part of the business-planning process at the LEGO Group. It allows students to understand the difference between a tailored scenario planning exercise, and the tenuous future-gazing processes that generally fail to get traction among business managers.

    Keywords: Risk Management; Global Strategy; Planning; Retail Industry; Asia;

    Citation:

    Mikes, Anette, and Amram Migdal. "The LEGO Group: Envisioning Risks in Asia (B)." Harvard Business School Supplement 114-048, December 2013. (Revised March 2014.) View Details
  7. The LEGO Group: Envisioning Risks in Asia (A)

    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;

    Citation:

    Mikes, Anette, and Dominique Hamel. "The LEGO Group: Envisioning Risks in Asia (A)." Harvard Business School Case 113-054, November 2012. (Revised January 2014.) View Details
  8. Capitalizing for the Future: HSBC in 2010

    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;

    Citation:

    Mikes, Anette, and Dominique Hamel. "Capitalizing for the Future: HSBC in 2010." Harvard Business School Case 112-097, April 2012. (Revised July 2012.) View Details
  9. Enterprise Risk Management at Hydro One (B): How Risky Are Smart Meters?

    Keywords: Risk Management;

    Citation:

    Mikes, Anette, and Dominique Hamel. "Enterprise Risk Management at Hydro One (B): How Risky Are Smart Meters?" Harvard Business School Supplement 112-073, December 2011. (Revised February 2012.) View Details
  10. Enterprise Risk Management at Hydro One (A)

    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;

    Citation:

    Mikes, Anette. "Enterprise Risk Management at Hydro One (A)." Harvard Business School Case 109-001, July 2008. (Revised January 2012.) View Details
  11. Risk Management at Wellfleet Bank: All That Glitters Is Not Gold

    This case motivates a debate on the role of staff functions, such as risk management: what does it mean for them to be independent, and at the same time, to partner the business lines? The case describes the risk assessment process in the corporate banking arm of Wellfleet Bank (cca. 2006-2009) around an illustrative business proposal in the corporate lending business, and illustrates the decision challenges faced by the case protagonists (two senior risk officers of the Group Credit Committee)—who grapple with the tensions common between the sales organization and the risk control function in large financial institutions. The discussion of the proposal particularly evokes the cultural tension between the risk function and the business line: should the risk function play the role of policeman or business partner?

    Keywords: Decision Choices and Conditions; Judgments; Credit; Banks and Banking; Governance Controls; Risk Management; Mathematical Methods;

    Citation:

    Mikes, Anette. "Risk Management at Wellfleet Bank: All That Glitters Is Not Gold." Harvard Business School Case 110-011, July 2009. (Revised January 2012.) View Details
  12. Lehman Brothers and Repo 105

    The collapse of Lehman Brothers in 2008 was the largest bankruptcy in US history. The case examines the economics of the off-balance sheet transactions Lehman undertook prior to the collapse, and highlights the corporate governance challenges in situations where firms face capital market pressure and market downturns. In particular, the case examines the financial accounting, auditing and internal management control practices around the Repo 105 transactions, which had a significant effect on the leverage position of the company. Based on the findings of the bankruptcy examiner's report, the case focuses on the role that management, external auditors, and the audit committee played in what amounted to a significant control failure.

    Keywords: Accounting; Policy; Accounting Audits; Corporate Governance; Financial Instruments; Risk Management; Financial Services Industry;

    Citation:

    Mikes, Anette, Gwen Yu, and Dominique Hamel. "Lehman Brothers and Repo 105." Harvard Business School Case 112-050, October 2011. (Revised December 2013.) View Details
  13. Auditing in the Post-Sarbanes-Oxley World

    Keywords: Accounting Audits;

    Citation:

    Mikes, Anette, Gwen Yu, and Dominique Hamel. "Auditing in the Post-Sarbanes-Oxley World." Harvard Business School Background Note 112-059, November 2011. View Details
  14. Risk Management at Wellfleet Bank: Deciding about "Megadeals"

    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, March 2009. (Revised May 2011.) View Details
  15. J.P. Morgan Private Bank: Risk Management during the Financial Crisis 2008-2009

    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;

    Citation:

    Mikes, Anette, Clayton S. Rose, and Aldo Sesia. "J.P. Morgan Private Bank: Risk Management during the Financial Crisis 2008-2009." Harvard Business School Case 311-003, September 2010. (Revised November 2010.) View Details
  16. Enterprise Risk Management at Hydro One (TN)

    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;

    Citation:

    Mikes, Anette. "Enterprise Risk Management at Hydro One (TN)." Harvard Business School Teaching Note 111-036, September 2010. (Revised September 2010.) View Details
  17. Jet Propulsion Laboratory (TN)

    Teaching Note for 110031.

    Citation:

    Mikes, Anette. "Jet Propulsion Laboratory (TN)." Harvard Business School Teaching Note 110-091, June 2010. (Revised August 2010.) View Details
  18. Enterprise Risk Management at Hydro One (TN)

    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;

    Citation:

    Mikes, Anette. "Enterprise Risk Management at Hydro One (TN)." Harvard Business School Teaching Note 110-086, June 2010. (Revised June 2010.) View Details
  19. Enterprise Risk Management at Hydro One (Multimedia)

    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;

    Citation:

    Mikes, Anette. "Enterprise Risk Management at Hydro One (Multimedia)." Harvard Business School Video Case 110-707, June 2010. View Details
  20. Jet Propulsion Laboratory

    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, February 2010. (Revised May 2010.) View Details
  21. The World Food Programme during the Global Food Crisis (B)

    Keywords: Crisis Management; Food; Non-Governmental Organizations;

    Citation:

    Mikes, Anette, Peter Tufano, Eric D. Werker, and Jan-Emmanuel De Neve. "The World Food Programme during the Global Food Crisis (B)." Harvard Business School Supplement 709-052, May 2009. View Details
  22. The World Food Programme during the Global Food Crisis (A)

    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;

    Citation:

    Mikes, Anette, Peter Tufano, Eric D. Werker, and Jan-Emmanuel De Neve. "The World Food Programme during the Global Food Crisis (A)." Harvard Business School Case 709-024, December 2008. (Revised March 2009.) View Details

Presentations

  1. Towards a Contingency Theory of Enterprise Risk Management

    Citation:

    Mikes, Anette. "Towards a Contingency Theory of Enterprise Risk Management." Paper presented at the American Accounting Association, Management Accounting Section Research and Case Conference, American Accounting Association, Orlando, FL, January 11, 2014. View Details
  2. How Do Risk Expects Become Influential?

    Citation:

    Mikes, Anette. "How Do Risk Expects Become Influential?" Professional Risk Managers' International Association. Boston Chapter Annual Meeting, Boston, MA, December 16, 2013. View Details
  3. Towards a Contingency Theory of Enterprise Risk Management

    Citation:

    Mikes, Anette. "Towards a Contingency Theory of Enterprise Risk Management." Paper presented at the Management Control Seminar, Université de Lausanne, Ecole des hautes études commerciales, Lausanne, Switzerland, November 27, 2013. View Details
  4. Towards a Contingency Theory of Enterprise Risk Management.

    Citation:

    Mikes, Anette. "Towards a Contingency Theory of Enterprise Risk Management." Paper presented at the 1st Management Theory Conference, Organizations, Occupations and Work Section of the American Sociological Association, San Francisco, CA, September 27, 2013. View Details
  5. Towards a Contingency Theory of Enterprise Risk Management

    Keywords: risk management; contingency planning;

    Citation:

    Mikes, Anette. "Towards a Contingency Theory of Enterprise Risk Management." Paper presented at the American Accounting Association Annual Meeting, American Accounting Association, Anaheim, CA, August 6, 2013. View Details
  6. Accounting and Risk Management, and Interactive Control Selection: Which, When and Why?

    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. View Details
  7. Accounting and Risk Management, and Interactive Control Selection: Which, When and Why?

    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. View Details
  8. How Do Risk Managers Become Influential? A Field Study of Toolmaking and Expertise in Two Financial Institutions

    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. View Details
  9. Accounting and Risk Management, and Interactive Control Selection: Which, When and Why?

    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. View Details
  10. How Do Risk Managers Become Influential? A Field Study of Toolmaking and Expertise in Two Financial Institutions

    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. View Details
  11. Case Teaching Seminar: Teaching Accounting with Case Studies

    Citation:

    Mikes, Anette. "Case Teaching Seminar: Teaching Accounting with Case Studies." Stockholm School of Economics Seminar, Stockholm, Sweden, June 20, 2012. View Details
  12. Accounting and Risk Management, and Interactive Control Selection: Which, When and Why?

    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. View Details
  13. How Do Risk Managers Become Influential? A Field Study of Toolmaking and Expertise in Two Financial Institutions

    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. View Details
  14. Risk Management, Accounting and the Aftermath of a Control Debacle

    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. View Details
  15. Assessing Risk and Uncertainty

    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. View Details
  16. Organizational Toolmaking: Transformations in the Influence of Experts

    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. View Details
  17. From Counting Risk to Making Risk Count: Boundary-Work in Risk Management.

    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. View Details
  18. Risk Management in High-reliability Organizations

    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. View Details
  19. Don't Stone the CROs! - The Evolving Role of the Chief Risk Officer

    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. View Details
  20. Don't Stone the CROs! - The Evolving Role of the Chief Risk Officer

    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. View Details
  21. Counting Risk and Making Risk Count: Metrological Dramas in Risk Management

    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. View Details
  22. Counting Risk and Making Risk Count: Metrological Dramas in Risk Management

    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. View Details

Other Publications and Materials

  1. Accounting, Risk Management and the Aftermath of a Control Debacle

    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: Risk Management; Governance Controls; Management Systems; Accounting; Conflict and Resolution; Trends; Financial Services Industry;

    Citation:

    Mikes, Anette. "Accounting, Risk Management and the Aftermath of a Control Debacle." 2008. View Details
  2. Enterprise Risk Management in Action

    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." Diss., London School of Economics and Political Science, Centre for Economic Performance, 2006. View Details
  3. Enterprise Risk Management in Action

    Keywords: Business Ventures; Risk Management;

    Citation:

    Mikes, Anette. "Enterprise Risk Management in Action." ESRC Centre for Analysis of Risk and Regulation Discussion Paper, October 2005. View Details