Governance and culture take center stage at The Risk Institute’s Annual Conference

Conversation surrounding governance and culture recently took center stage at The Ohio State University Fisher College of Business, as The Risk Institute explored the impacts of the two key aspects of business at its Annual Conference. The two-day conference brought together Risk Institute members, business leaders, experts and faculty thought leaders from Fisher for an in-depth examination of the risk management and strategic implications of governance and culture.

Phil Renaud and Jeni Britton Bauer of Jeni's Splendid Ice Creams discuss maintaining culture through crisis.

Phil Renaud and Jeni Britton Bauer of Jeni’s Splendid Ice Creams discuss maintaining culture through crisis.

Considering the various sides of governance and culture is critical to understanding how to leverage risk management to create value for an organization. The conference featured four keynote speakers, Gordon Bethune, former CEO of Continental Airlines; Cameron Mitchell, founder and CEO of Cameron Mitchell Restaurants; Randall Kroszner, former Governor of the Federal Reserve System; and David Gebler, author of best-selling book The 3 Power Values.

Bethune opened the conference and focused on his experience turning around Continental Airlines over a decade, which is detailed in his book, From Worst to First. He emphasized the importance of building accountability between employees and the organization saying, “What gets measured and rewarded, gets done.”

Mitchell is a self-described serial entrepreneur who understands that taking risks is necessary to be successful in business saying, “I may shoot myself in the foot and walk with a limp, but I’ll never shoot myself in the head and make a fatal mistake.”

Academic Director Isil Erel speaking at Annual Conference 2016.

Academic Director Isil Erel speaking at Annual Conference 2016.

During his time with the Federal Reserve System and as a professor of economics at the University of Chicago, Kroszner never imagined he would be helping guide America’s economy through the worst financial crisis since the Great Depression. He discussed the potential ramifications of the Fed keeping interests rates at historic lows since 2008 saying, “When your short-run policy becomes a long-run policy, you will always run into unintended consequences.”

Named one of America’s top Thought Leaders in Trustworthy Business Behavior, Gebler is an innovator of new approaches that integrate culture, ethics, values and performance. His talk detailed how to know if your organization’s culture is a risk factor utilizing the three power values— integrity, transparency and commitment.

In addition to the keynotes, the third-annual conference brought together business leaders and experts for a series of RISKx presentations and panel discussions on women in risk, governance and culture related to business. The culture discussion explored  employees’ attitudes toward risk, mergers and acquisitions, maintaining culture through crisis, and emerging risks in the energy industry.

The Risk Institute’s Executive Education Series will resume November 15 with a discussion on Political Risk.

 

Data Analytics and Managing the Risk of Demand Uncertainty

by Gregory Sabin – Visiting Lecturer, The Ohio State University Fisher College of Business

A 2012 Supply Chain Insights survey asked supply chain managers to name their top 10 pain points. Three out of four respondents listed demand volatility, which made it one of the most painful aspects of supply chain management, second only tosabin Greg supply chain visibility.  Firms can reduce demand volatility and the associated risks by incorporating economic and demographic data to create simple and more accurate business models.

Risks associated with demand volatility include both risks of overestimating and underestimating demand.  Overestimation of demand will cause declines in the firm’s return on assets (ROA) because of the overcommitment of assets and unnecessary expenditures that will be incurred in anticipation of surplus demand that does not materialize.  Underestimating demand is associated with increased production costs, lower quality levels and decreased customer satisfaction.

These risks affect every part of the business, including customer service, financial planning and analysis, supplier development, new product development, human resource management, product/process engineering and investor relations.  As such, firms need to approach forecasting and planning from a cross-functional perspective.

Why are most businesses not already doing this? As recently as five or six years ago, businesses lacked not only easy access to the detailed information needed to add analytical models to their forecasting process, but also the ability to process that information in a cost-effective manner. Traditionally, this meant firms focused primarily on internal marketing and supply chain information such as distributor estimates, sales projections, product lead times, inventory levels, production capacity and workforce head counts.

Now we are seeing the amount of readily available information exploding in the public domain.  As “big data” and tools to access the information has grown to a point of critical mass, firms cannot only access customer, product and competitor information, but also macroeconomic data that is more detailed and forward-looking than what has been available in the past. Combining this economic data with proprietary firm specific information is creating a new proactive approach to balancing the risk associated with forecasting and demand management.

Early adopters of this new approach are utilizing data-driven analytical tools to enhance the planning and forecasting processes and to give significantly more accurate information to all business units involved in their company’s planning process. The pain associated with demand volatility can be reduced because a firm has armed itself not only with better information, but also with an integrated cross-functional perspective.


The Risk Institute Executive Education Series will continue on April 30, 2015 when Professor Sabin will co-lead a half-day session on Demand Uncertainty, Data Analytics and Risk Management. For more information or to sign up for the session, visit FISHER.OSU.EDU/RISK