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Many Execs Are Blind to Risk International Work Can Slow Down Careers AS MUCH AS companies value international experience, executives who have worked on international assignments may take longer to advance to the CEO's position. In a recent study, Burak Koyuncu, assistant professor of management and strategy at Rouen Business School in France, and Monika Hamori, professor of human resource management at IE Business School in Madrid, Spain, sampled CEOs of the 500 largest corporations in Europe and 500 of the largest corporations in the United States. In this group, 40 percent of European CEOs and 24 percent of American CEOs had international assign- ment experience. The authors found that the longer these executives spent outside their home organizations, the more slowly they reached the CEO position. The authors note that a company's foreign operations often place executives on the periphery of the organization's activity. While on assignment, these executives also are separated from their headquarters' resources and information, as well as from their social networks. Even so, international experience is more likely to be on a new CEO's résumé today than in the past. In 1993, only 7 percent of newly appointed CEOs had interna- tional experience, compared to 18 percent in 1998 and 44 percent in 2003. The authors conclude that it is important for CEOs to have had some international experience. However, they recommend that professionals whose sights are set on the CEO's office accept fewer international assignments, accept shorter assign- ments, or gain international experi- ence as visitors rather than as expa- triates. Those who must take longer international assignments should stay in continuous contact with their home offices and encourage visits from headquarters personnel to maintain their social networks. "Career advancement in large organizations in Europe and the United States: Do international assignments add value?" was published in the International Journal of Human Resource Management, Volume 22, No. 4. THE OFTEN CATASTROPHIC results that occur when corporate boards and executives pursue financial growth at any costs are well-documented in the histo- ries of companies such as Enron and Lehman Brothers. But a new report finds that these executives were inade- quately prepared to gauge the risk of their actions. They were, in effect, "risk blind." "Roads to Ruin" was conducted by researchers at Cass Business School at City University London in the United Kingdom on behalf of London-based risk man- agement association Airmic. For the report, researchers examined 23 companies that experienced a crisis with potentially catastrophic outcomes. These companies, each with pre-crisis assets totaling more than US$6 trillion, included heavy hitters such as AIG, Arthur Andersen, BP, Northern Rock, and Cadbury Schweppes. Of the 23 firms, three completely collapsed, three were rescued by government, and 16 had executives who suffered financial penalties. In four cases, executives received prison sentences for their actions. Shareholders of nearly all the firms suffered severe losses. In all, 20 CEOs and chairmen lost their jobs. Researchers found that catastrophic corporate failures often have in common seven factors, which may seem disconnected until after damage has been done. They include non-executive directors (NEDs) with little or no ability to monitor and control executives; blind- ness to inherent risks to business model or reputa- tion; inadequate leader- ship in areas of ethos and culture; defective internal communication and flow of information; organi- zational complexity and change; inappropriate incentives; and a "glass ceiling" effect that keeps risk managers from addressing the risky behaviors of top execs. In the pre-crisis environments of many of these firms, risks were not even discussed due to some or all of these factors. That was true even when risks were appar- ent to others within the organization. The report calls for NEDs to do more to discover this information, for companies to include those potential pitfalls in their risk plans, and for the risk and internal audit profes- sional community to develop new skills to work with executives. BizEd November/December 2011 67