Introduction: Organizations, Risk and Regulation

Abstract

Risk, regulation and practices of organizing are interrelated in a myriad of ways. Natural disasters, technical failures, and also processes of organizing are sources of risk to which organizations must respond and for which new managerial and regulatory practices are demanded. In this introduction we highlight three salient features of risk management: the (un)intended production of risk by organizations; the complex interrelationship between risk management and regulation; and the evolving and often contested nature of risk management knowledge. Each of these three themes is evident in the different contributions to this themed section. Copyright Blackwell Publishing Ltd 2006.

Risk and risk management in management accounting and control

“…Since the first Management Accounting Research special issue on risk management was published in 2009, there has been a great deal of attention to risk in academic circles, in industry, in the professions and in the media. Recent world events including the global financial crisis, the financial crisis facing the Eurozone, the horsemeat scandal, the Japanese earthquake and tsunami, the floods in Thailand and the Deepwater Horizon oil spill in the Gulf of Mexico have all refocused and intensified interest in risk, the nature of systems that operate to manage risk and the outcomes of risk management (Scheytt, Soin, Sahlin-Andersson and Power, 2006). This is not to say that the world has got riskier as Beck (1992) suggests -at the end of the day the Chernobyl disaster was worse in terms of human deaths and suffering than Deepwater Horizon -although the long-term ecological and economic consequences are still unknown.…”

“…How can organizations (and institutions) be designed to effectively assess, manage and govern risks? What are the organizational side effects of risk management -including the side effects of managing risk itself (Scheytt et al, 2006) and, what is the nature of the relationship between the chief management accountant and the risk function? Under risk-based regulation the use of risk management systems is often a response to limited regulatory resources (Power, 2007).…”

“…Crouhy et al, 2000;Langfield-Smith, 2008;Stulz, 1996), little attention has been paid to the actual management of risk and the effects of risk management in organizations. Indeed, with a few exceptions (Arena, Arnaboldi, & Azzone, 2010;Bhimani, 2009;Collier and Berry (2002) ;Mikes, 2009Mikes, , 2011Power et al, 2009;Scheytt, Soin, Sahlin-Andersson, & Power, 2006;Wahlström, 2009 andWoods (2009), we have relatively little understanding about the (complex) interrelation between risk, risk management and management accounting and control practices. Furthermore, the discourse of risk and the way it is managed is not always a feature of the wider management control framework in organizations.…”

Constructing risk objects and their controllability in the insurance industry

“…Rather, the literature argues that metrics are creeping into areas of risk assessment that more properly involve human judgement, leading to excessive and dysfunctional quantification in risk management (Power, 2004;Power et al, 2009;Taleb, 2007;Scheytt et al, 2006). For example, Holzer and Millo (2005) outline that the quantification of risk management in financial markets can create side-effects -or second-order dangers -through the use of risk assessment and management systems.…”

“…Yet, despite organizations being the critical agents for managing risk and this task becoming increasingly difficult (Hutter & Power, 2005;Scheytt, Soin, Sahlin, Andersson, & Power, 2006), organizational scholars have paid infrequent attention to how organizations construct and control risk (Gephart et al, 2009;Maguire & Hardy, 2013). We know little about the association between, and dynamics of, different constructions of risk and their control (Hilgartner, 1992).…”