Corporate governance theatre: risk culture, plausible deniability and wilful blindness
James C Paterson provides an overview of plausible deniability, wilful blindness and associated phenomena around corporate governance.
Background and introduction
My role as a consultant is to work closely with clients on governance, risk, compliance (GRC) and assurance challenges. Our aim is to ensure GRC improvements are genuinely welcomed and used by business managers, alongside risk, compliance and audit professionals; balancing rigour with pragmatism and cultural fit.
Earlier in 2018, I wrote an article on why we continue to get GRC and assurance surprises of some magnitude, despite management assurances and auditor sign offs. My perspective is that too often we have ‘corporate governance theatre’. Things look good in many ways, but – just below the surface – there are ‘hairline cracks’ that are missed by management, boards and even auditors and regulators, until it is too late.
After writing this article, I was happy to be asked by ACCA to write an article on risk culture – including ‘plausible deniability’ and ‘wilful blindness’, which are part of the theatre problem – and here this article:
provides an overview of plausible deniability, wilful blindness and associated phenomena
how and why these behaviours arise
warning signs to watch out for
practical steps in the context of GRC to make meaningful progress.
Note that, in my experience, progress is not about implementing new systems (though these may help), but rather by looking at what is currently being done from a different angle, with the objective of ‘getting real’ about the issues, and potential gaps, that matter the most.