In late March, I chatted with OpenPages’ Gordon Burnes about Toyota’s risk management issues and whether or not Kermit the Frog is a good fit for a chief risk officer position (he’s not, Burnes asserts).

This month, we picked up the chat while discussing how tone at the top should be expressed; how risk appetites are stated and communicated; and how key risk indicators can cure “alarm fatigue.”

Eric Krell: This begs the question: Who should be the risk manager then … Miss Piggy? Animal?

Certainly someone with the clout and courage (and karate chop) to surface bad news, right?

In fact, that marks a distinguishing characteristic, if earlier news reports are to be believed, between pre-crisis Goldman Sachs and pre-crisis banks that were crushed by the financial crisis. Goldman’s chief risk officer came from the trading floor and had the background, credibility and authority to raise questions. … Here, I think you are saying that tone at the top is a must, but you’re also pointing to the importance of the middle and lower levels of the organization – which is where technology can help to enforce risk-culture-building behaviors. I like the example of the organization that requires actions on risk-rating of “3,” which sounds like a “yellow” issue.

Here’s my question: How do organizations avoid risk-management burnout? Or, more precisely, what are some of the ways in which you see organizations achieving a healthy balance between taking too little action in response to risks and overreacting to risks? more