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Council Opinions are prepared by the Cutter Business Technology Council and include the commentary of each Council Fellow and the logic behind his or her concurring or dissenting opinion, as well as the strategic implications of the trend.

DOMAIN

IT Strategy

Assertion #181

Risk management as practiced in the financial sector has now been revealed as a charade. Risk management as practiced in IT is probably little better.

Over the past two decades, the topic of risk management -- explicitly at the systems portfolio and project development levels -- has been hailed as an indication of IT's coming of age. The present economic meltdown has proved that the finance industry's practice of risk management was more about covering up risk than managing it. The factors that made financial managers want to game the system are all too similar to factors working on IT managers. We would be fools indeed to believe that risk management in our organizations is working better than its prototype in banking and insurance.

This Business Technology Trends Council Opinion by Tom DeMarco considers what went wrong with risk management in the financial and insurance industries in recent years, and how a better alignment of an executive's personal risk profile with his/her corporation's risk profile might yield more positive results. You'll learn why employees at lower levels have "other" factors in their individual risk profile -- beyond financial reward -- that can make sound risk management problematic, and how to overcome these challenges. Finally, you'll gain advice on how to avoid flawed risk management approaches and replace them with serious risk management.

Published: April 2009, 17 pages, PDF format

Authors: Tom DeMarco, Lynne Ellyn, Mark Seiden, Ken Orr, Christine Davis, and Tim Lister

Online resource center clients: Access this report online