The obsession with green: Subconsciously increasing risk in third-party governance

Don Nguyen and William Gilson

Journal of Securities Operations & Custody, 2018, vol. 10, issue 2, 157-166

Abstract: The purpose of this paper is to argue that senior management is increasing risk as a direct result of risk mitigation actions. This report looks at governance and risk in the context of third-party governance and argues that boards and senior managers need to reevaluate their own understanding of risk before applying their culture to third party oversight. The paper examines the obsession with the colour green, which we believe is leading to passive oversight and a lack of operational and risk awareness. At such a point, perception becomes irrational and good (performance indicators that tell a story) is seen as bad and bad (weak green indicators) as good. This paper puts forward the suggestion that through better reporting and discussion, organisations can spend less time, have more understanding, reduce risk and give a better service to their clients.

Keywords: databases risk; investment operations; oversight; governance; outsourcing; control; mitigation (search for similar items in EconPapers)
JEL-codes: E5 G2 K22 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jsoc00:y:2018:v:10:i:2:p:157-166

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