Role of Ethics and Responsibility in Risk Management

Ethics are important in any professional field. Your moral compass guides your decisions and conduct, and in the Risk Management field, can impact everyone associated with the company (employees, leadership, stakeholders, shareholders, etc.). As a professional in the Risk Management field, one analyzes and attempts to quantify the potential for losses. Then, he/she takes action or inaction depending on the analysis. Thus, ethical behavior from Risk Management professionals are a vital component of a business. Ethics in business, also known as corporate ethics, examines ethical principles and moral or ethical problems that arise in a business environment.

It is important to differentiate between 'feelings', 'laws', 'social norms' and 'ethics'. Many times, people tend to equate ethics with their feelings. However, being ethical is not always a matter of following one's feelings. A person following his or her feelings may shy away from doing what is right. In fact, feelings frequently deviate from what is ethical. Furthermore, being ethical is also not always the same as following the law. The law often incorporates ethical standards to which most citizens subscribe. But laws, like feelings, can deviate from what is ethical. One example is America's own pre-Civil War slavery laws that are grotesquely obvious examples of laws that deviate from what is actually ethical. Finally, being ethical is not the same as doing "whatever society accepts." In any society, most people accept standards that are, in fact, ethical. But standards of behavior in society can deviate from what is ethical. An entire society can become ethically corrupt. Nazi Germany is a good example of a morally corrupt society.

What, then, is ethics? First, ethics refers to standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues. Ethical standards include standards relating to rights, such as the right to life, the right to freedom from injury, and the right to privacy. Such standards are adequate standards of ethics because they are supported by consistent and well-founded reasons.

Secondly, ethics refers to the study and development of one's ethical standards. As mentioned above, feelings, laws, and social norms can deviate from what is ethical. So it is necessary to constantly examine one's standards to ensure that they are reasonable and well-founded. Ethics also means, then, the continuous effort of studying our own moral beliefs and our moral conduct, and striving to ensure that we, and the organizations we help to shape, live up to standards that are reasonable and solidly-based.

The Newspaper Test of Ethics

When you are faced with an ethical dilemma, think about how your actions would look on the front page of the newspaper. Would you choose this action if you had known it would be reported in full for everyone to see? There are many versions of this test, but it all comes down to the question whether we feel obligated to shroud our actions, to hide them from the view of our boss, our family, our friends.

return to top | previous page | next page