Tech CEOs ? Life on the Edge of Risk Management | Business 2 ...

CEOs have been experiencing a significant amount of change.

Heading up a company is not all it?s cracked up to be. A CEO has to be a master ? at almost everything. Whether it?s legislative advocacy, solid corporate governance practices, strategic planning or even choosing the right staff members, these head honchos must be able to balance every aspect of an organization?s future and stand at the forefront of success or failure.

In the tech industry, for instance, CEOs have been experiencing a significant amount of change. Sometimes these executives are stretched too thin because of the complex nature of tech services now driven by the evolving social networking platform. In this setting, the job of the CEO goes beyond simply achieving excellence in strategic execution. He or she must have the ability to react quickly to a situation, craft capabilities and watch for early warnings of changes. In business, this is where risk management comes in.

A report on Business Insider, On the hot seat: 10 tech CEOs who could be fired tomorrow, examines major risk management missteps some executives have made while heading up a tech company.

According to the report, the following CEOs are expected to get the boot soon: Dick Costolo, CEO of Twitter, who has yet to demonstrate the social networking site is more monetizable than AIM or chat; Scott Thompson, Yahoo?s new CEO who is already wrestling with a proxy fight against shareholder activist Dan Loeb; and Andrew Mason, Groupon?s CEO who can?t seem to get the company?s financial reporting right ? as a result, the ?deal-of-the-day? website is undergoing an investigation by the SEC.

?These are strategic risk oversight and management on steroids ? mostly about exploring how millions of people ?stick? to social media and then monetizing,? says Brian Barnier, an industry analyst and risk management expert.

The critical question here, however, is what should investors, the board, CEOs and other managers do to manage these types of extreme risks? After all, no executive wants to end up in the slammer or loose their job due to poor risk management strategies.

So what can tech CEOs do to protect their seats? Barnier suggests the following:

i) Evaluate and plug risk oversight and management gaps where necessary in a timely manner

ii) Stop passing the buck to get the job done right

iii) Investors must both provide insights on board oversight and conduct their own due diligence. This is all aligned to managing risk in a dynamic and developing market space.

Additionally, Barnier says that the corporate secretary is a good resource in the risk management process. Since these governance professionals assemble materials for board members, they can press the various authors on whether the risk analysis is sufficient to make a final decision. Also, CEOs should work together simultaneously with the CFO and IRO to piece the different parts of the business model together, which can help when communicating with investors.

In the end, all CEOs must be accountable for risk management on a daily basis. Boards must monitor these executives? risk management agendas and start making more risk-awareness decisions in the boardroom.

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