Financial Risk and the Need for Superior Knowledge Management

Three recent failures of risk management—at Barings Bank, Kidder Peabody, and Metallgesellschaft—appear to be due to three underlying causes: dysfunctional culture, unmanaged organizational knowledge, and ineffective controls. The first and the last of these have been extensively discussed in the me...

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Bibliographic Details
Published in:California management review 1996-04, Vol.38 (3), p.77-101
Main Authors: Marshall, Chris, Prusak, Larry, Shpilberg, David
Format: Article
Language:English
Subjects:
Architectural engineering
Business
Business failures
Business management
Business risks
Business structures
Communications satellites
Control systems
Corporate culture
Employees
Engineering firms
Finance
Financial management
Financial risk
Financial risks
Financial services
Information
Information Management
Investment risk
Knowledge
Knowledge management
Management
Management controls
Management decisions
Organizational culture
Risk
Risk management
Treasuries
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Summary:Three recent failures of risk management—at Barings Bank, Kidder Peabody, and Metallgesellschaft—appear to be due to three underlying causes: dysfunctional culture, unmanaged organizational knowledge, and ineffective controls. The first and the last of these have been extensively discussed in the media. This article explores the importance of the second: knowledge management. It demonstrates the need for a more structured approach to transferring knowledge to decision makers before it is needed, enabling the access of information as it is needed, and finally generating and testing new knowledge about the firm's changing risk management requirements.
ISSN:0008-1256
2162-8564
DOI:10.2307/41165844