Abstract

Three recent failures of risk management--at Barings Bank, Kidder Peabody, and Metallgesellschaft--appear to be due to three underlying causes: dysfunctional culture, unmanaged organizational knowledge, and ineffective controls. The first and the last of these have been extensively discussed in the media. This article explores the importance of the second: knowledge management. It demonstrates the need for a more structured approach to transferring knowledge to decision makers before it is needed, enabling the access of information as it is needed, and finally generating and testing new knowledge about the firm's changing risk management requirements.