The Caux Round Table (CRT) today described the BP crisis in the Gulf of Mexico as fundamentally a governance failure and called on corporations to take the lead in preventing such failures by embracing a more responsible and moral form of capitalism. CRT Chair Dr Noel Purcell stated that the failure of BP to prevent and, subsequently, to be able to control the massive oil leak from their well in the bed of the Gulf of Mexico, demonstrates the need for more enlightened and improved corporate management of risks. The environmental and social harms precipitated by the Gulf of Mexico crisis parallels the economic and social harms triggered by poor risk management on the part of banking firms in the lead up to the Global Financial Crisis of 2008. In both cases, risk management was compromised as senior corporate officers and boards of directors failed to closely monitor and control the widening of risk parameters as the limits of technology, on the one hand, and of financial leverage on the other, were pushed to extremes. Recognizing that management of risks and stakeholder impacts determines the quality of a company's responsibility and resilience, the Caux Round Table has pioneered development of a new approach to management of such obligations. The approach recognizes that risk is inherent, not just to business, but to the human condition, which always seeks to apply intelligence and creativity to use of our resources. It recognizes that the need of business and humanity is to manage risk and not to foolishly seek its elimination. An equilibrium embracing a range of acceptable risks is the goal of the approach. This is especially needed in free market environments where the propensity of modern business is to accelerate risk taking through invention of new technologies and new methods of financial intermediation. Finding the right level of risk invokes application of sound judgment and so needs to be placed with persons of wisdom and good character, who possess a sense for history and understand the frailties of human nature and the role of the common good. 'Capitalism is the best means to positively channel humanity's access to needed resources, both natural and financial, especially in the form of successful enterprise. But equally, irresponsible capitalism ultimately causes material harm economically, socially and environmentally' said Dr. Noel Purcell, CRT Chair. As experienced by the banks and now by BP, poorly handled risk management that results in material social harm, directly leads to the re-issuance of society's license to operate on new and more restrictive terms. Most often, these new restrictions are placed in the law and in regulatory supervision of key business decisions. Just recently, the United States Congress adopted new laws limiting the entrepreneurial freedoms of financial firms. And the Obama Administration has required BP to contribute US$20 billion to a fund for payment of damages caused by the oil gushing into the waters of the Gulf of Mexico. Therefore, to maximize the scope of their licenses from society, responsible private firms need enhanced techniques to enable their boards of directors to exercise fiduciary attention over a wide range of risk possibilities. Society trusts more those firms that act ethically and responsibility, permitting them greater flexibility to seek profitable business opportunities. 'It is the responsibility of boards of directors to watch the pots that might boil over and scald all about them. Management of risk is too important to be left to staff professionals. Poorly managed risk threatens the fundamental financial value of the enterprise and so preserving enterprise value through proper stewardship of risk is a fundamental board responsibility', Dr. Purcell said. The CRT risk assessment process, titled Arcturus, also recognizes the enormity of such responsibility in large modern multi-national corporations engaged in complex, far-flung operations. It enables boards of directors, in timely fashion, to gain accurate assessments of a company’s risk profile. The Arcturus process is simple but subtle. It permits boards and senior managers to monitor future developments of concern to stakeholders. It builds on the proven lessons of quality management, which after all, was a most successful enhancement of risk management issues. The Arcturus process engages the experience and the judgments of directors, senior managers and line professionals. It surfaces concerns that a company’s quality of performance is at risk and helps prevent it being compromised by short-sighted views of risk. For more information on Arcturus, contact Stephen B. Young, CRT Global Executive Director at: Steve@cauxroundtable.net +1 651 223 2852 and by mail at The Caux Round Table Six West Fifth St, Suite 300M Saint Paul, MN 55102 USA
BP and the Gulf of Mexico - a way forward to restore modern capitalism?
Not only Christo is a master of wrapping!
Unfortunately we have to disappoint you - this artistic installation is not the end result of our activities in Hong Kong. Concealed here is the first assembled refrigerator plant of the largest individual order we have received to date. What is no secret, however, is that on 27.01.2017 all 75 containers will be delivered, meaning that in the following week further plant can also be assembled. A complex recycling park with a total of 8 recycling plants will be created. It will include 2 LCD monitor recycling...
EPA Settlement with New York Electronics Recycler Protects Public from Potential Lead Exposure
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Dynamic Recycling buys select assets of embattled MPC
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