This document discusses risk management and people within an organization. It addresses how to build trust between management and employees and ensure employees' actions align with the company's values and risk tolerance. Specific points covered include rewarding employees for preventing bad decisions, clearly defining acceptable and unacceptable behaviors, and treating staff as working partners rather than just paying for their time. The overall message is that people are a major risk factor for companies and managing that risk requires transparency, trust, and aligning incentives.

1. Risk Management
il Personale
Dick Lam

2. Agenda
1. Financial body check-up
2. Re-identification of core competence
3. Risk management: A/R
4. Risk management: Production & Inventory
5. Risk management: Cash
6. Risk management: People
7. In-depth meaning on Risk Management

3. People
• This is you and me that usually expose
the company to risky situation
• Are you using the following assumption:
– Manager’s job is to protect the company
from the abuses of the workers?!
• Why & How?

5. • Am I the only one that knows the
company and its business?
• Do I welcome opposite comment?
opinion?
• Do I reward people for preventing me
from doing bad deal which I originally
thought it was good?
• How do I describe “Luck”?
• Do I continuously ask for negative

6. • There is no repeated fluke
• Goodness & badness co-exist (yin &
yang)
opposition)
• The underlying principles of running
the existing business
• The line between acceptable &
unacceptable behavior
• The value of devil advocate (loyal

7. • Belief Systems
– Systems to articulate the values and
direction that senior managers want their
employees to embrace
– Draw employees’ attention to key tenets of
to business:
• how the organization creates value
• The level of performance the organization
strives for
• And how individuals are expected to manage
both internal & external relationships

8. • Boundary Systems
– Management principle: power of negative
thinking, minimum standards
– Tell people what not to do only and let
them figure out what to do
– Of particular value when employees under
pressures to achieve superior results being
collided with stricter codes of behavior

9. Who knows your business?
• Yourself
• Your employees
• Your suppliers
• Your bankers
• Your competitors
• But not your investment consultants
• Your customers

11. Trust
• Is myself trustworthy?
– To the bank and to the employees?
• Is my business trustworthy?
• Do I trust my employees?
• Do my employees trust me?
• How do I earn the trust?
• ………….
• Is my business philosophy trustworthy?

12. Some sidetrack
Trust:
• I cannot ask for it
• I can accept being trusted or give trust
happen
• When I trust, I take the risk
• It liberates and mobilizes human
agency, release creative, uninhibited,
innovative, entrepreneurial activism
toward other people
• When I trust, I expect something

13. To be trustworthy
• I need to be financially healthy
– proved by the Balance Sheet & PNL
• I need to meet the expectation of the
employees
• I need to be consistent with what I said
and intended to do
creditors, suppliers, customers &

14. Risk vs. Uncertainty
• Risk: I do not know the future
• Do I create uncertainty?
• Why?

15. Transparency - GIVE
• Goals
• Identity
• Values
• Emotion

16. 5 R – Cost saving strategy
• Remove
– Why does a particular expense need to
incur? Is there a way to totally remove this
expense?
• Replace
– If not possible to remove this expense, can
we replace the function with a cheaper
one?

17. • Reduce
– If not possible to remove it, is there a way
to reduce the spending?
– We should think about request for price
reduction from supplier or source
alternative supplier.

18. • Redesign
– If not possible to reduce, can we re-design the
process to utilize the scarce resources?
– Kaizen should be a continuous process.
process by freshman.
– The old process creator should only act as a
information provider but not member of new
Kaizen group.
– There should be a regular review of existing

19. • Redistribute
– If not possible to redesign the process, can
we have the function to share its value to
different functional area as well as the
– Maximization subject to constraint is
maxim not only in economics but also in
cost saving perspective.
Cost?

20. How to pay your staff
• Buy their time or their talent
• Treat them as staff or “working partner”
• Pay by fixed or portion in variable
YOUR STAFF ARE THE ONES DOING
THE BUSINESS & GENERATING THE
INCOMES