Risk Management: so who is playing at what? by Richard Faint
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The term ‘risk management’ has now grown to cover virtually every aspect of business life. For example, should a trend result in the fact that a market may no longer like the product this is not a matter for the selling side of a company. Instead it is now treated as a business ‘risk’ and a team of risk management experts (consultants) will be approached to sort it out. Trading companies might have thought that their internal controls would cover the use of such experts. No longer. The experts in risk, who often turn out to be the accountants/lawyers hiding under different or more sophisticated hats, need to be brought in from outside. This gives an odd result since, as risk and its management have become very fashionable in the business world, the very acceptance that risk is still part of the equation that linked risk to reward is reduced. Is this possibility just an effect of the emphasis that is now put on risk management which seems to have, as its stated goal, the elimination of risk? The present trend seems, at least to this observer, to be that the only risk that is acceptable is a risk carried by someone else In one case, ADT Ltd v BDO Binder Hamlyn [1995] where a board of directors sued a firm of accountants for £65m ($108m): the first instance Court found, in effect, that the directors were not responsible for the decision to take over another company.