Abstract
Risk is defined differently in different disciplines, its meaning sharing the uncertainty that is its essence. This chapter explores “risk” as an active verb, that is, what it means to take risk or to risk, and what it means to manage the risk taking of individuals within the modern corporation. Rather than the usual focus on the well-worn material of the processes and uses of risk measurement and assessment, we explore its ethical aspects, specifically, the conscious decision to take on risk, and its management through incentives that shape organizations’ and individuals’ focus on risk.
There are ethical issues in risky business activities and risky aspects of business ethics. As business ethics is also a dimension of theories of leadership and human resources management, this article focuses on the ethical aspects of risk management, as outlined by business ethics. After a short introduction, there is a general overview of the different ethically relevant dimensions of risk in business (Sect. 2). Section 3 focuses specifically on management risks and risk assessment. Section 4 outlines the role of normative loopholes in risk management to frame our ethical perspective: order ethics. In Sect. 5 we discuss its relation to risk, specifically the way it deals with the human factor in organizations. Section 6 concludes by sketching a theoretical framework for what corporations can do to effectively manage ethical risks and fulfill their social responsibilities at the same time.
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- 1.
Kant 1784.
- 2.
Luhmann [23].
- 3.
Bonabeau [5].
- 4.
A very detailed study on this issue and on intrinsic social and organizational problems is introduced by Weick [39] with “The Mann Gulch Disaster”.
- 5.
Knight [17].
- 6.
Knight [17].
- 7.
Hubbard [13].
- 8.
Hanley and Hiromitsu [11].
- 9.
Stigler [36]: 131.
- 10.
Jaynes [15].
- 11.
Stigler [36].
- 12.
E.g. “Risk is the unwanted subset of a set of uncertain outcomes” (Cornelius Keating, acr.).
- 13.
This definition was accepted by The Open Group, see: The Open Group [26].
- 14.
“Risk is a combination of the likelihood of an occurrence of a hazardous event or exposure(s) and the severity of injury or ill health that can be caused by the event or exposure(s)” (Occupational Health & Safety Advisory Service [25]).
- 15.
Wolman [40].
- 16.
Cf. the other articles in this volume.
- 17.
Tversky and Kahneman [37].
- 18.
Rucellai [32] (written about 1450).
- 19.
- 20.
Eucken [7].
- 21.
Cf. Smith [35].
- 22.
- 23.
About the function of normative values in decisions see Schnebel [33].
- 24.
Cf. Picot et al. [27].
- 25.
Cf. the Institute of Risk Management, Risk Appetite and Tolerance, Crowe Horwath.
- 26.
- 27.
Cf. Westphal [38].
- 28.
Power [29].
- 29.
- 30.
Cf. Rücker [34].
- 31.
Cf. Matthes [24], 56.
- 32.
www.bis.org, publications and papers.
- 33.
Beyond this categorization is a huge number of different other categorizations offered, e.g., for project management, IT, running nuclear power plants, health and cancer.
- 34.
Friedman [9].
- 35.
Popper famously wrote that the main advantage of democracy is to be able to get rid of its governments “without bloodshed—for example, by way of general elections” (Popper [28], vol. 1, 124, our italics). Note the wording “for example”.
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Luetge, C., Schnebel, E., Westphal, N. (2014). Risk Management and Business Ethics: Integrating the Human Factor. In: Klüppelberg, C., Straub, D., Welpe, I. (eds) Risk - A Multidisciplinary Introduction. Springer, Cham. https://doi.org/10.1007/978-3-319-04486-6_2
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