Global

Details

  • Service: Advisory, Risk Consulting, Internal Audit, Risk Consulting Services, Forensic, Financial Risk Management, Accounting Advisory Services
  • Industry: Financial Services, Insurance, Banking, Healthcare, Industrial Manufacturing, Technology, Media, Telecommunications
  • Type: Survey report
  • Date: 5/16/2013

Weak incentive structure 

Risk-based decision-making is impeded when there is a weak link between incentives and risk.

Most survey respondents admit they are not very good at motivating business-line managers to adopt risk-based methods of making decisions. One likely reason is that 65 percent of respondents admitted that the link between risk management and compensation among business-line employees was weak or non-existent.


Weak incentive structure


A way to improve alignment is to provide employees from top to bottom with incentives that will motivate them to weigh skillfully the risk and opportunity in every business decision they make. Of course, financial compensation tied to evaluations of risk management is not the only form of incentive. Career development and public praise are two of the many other ways of motivating employees to improve their business judgment.


 

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