As reported in JoongAng Daily, the statement, "The first rule in corporate risk management is thata those at the top are in charge. Entrepreneurs are warned not to take the backseat and let the chief risk officer take command at times of crisis," proves to be true over and over.
An example of this rule is when then-CEO of Johnson and Johnson, James Burke, quickly responded with sincerity and urgency to the company's crisis when seven people died after bottle of Tylenol were found to be laced with cyanide. Their disaster recovery was successful with this approach.
An ineffective response by Exxon Chairman Lawrence Rawl to a company tanker's spill of millions of gallons of oil off the shores of Alaska proved shatter the company's image.
The second rule mentioned in this article is that risk management is all about honesty. Again, Exxon broke this rule when they tried to dodge responsibility by finger-pointing at coastal guards and public officials. Countering this approach, Ashland Oil in 1988 took full responsibility when one of their oil tanks collapsed and sent millions of gallons of diesel into the Ohio river. This response afforded the company forgiveness and praise for a cool-headed management team.
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