Public-private sectors must work together to restore trust, manage risks post-COVID

The public and private sectors must work together more closely to restore trust and stability across international institutions and to enable them to respond more quickly to major risk events, a leading compliance expert has said.

Organisations need to develop fundamentally different ways of working in the wake of the COVID-19 pandemic, Dr. Klaus Moosmayer, the chief risk and compliance officer at Novartis in Switzerland, told the Governance Institute’s annual conference in Australia.

Major international risk events such as pandemics, cyber attacks, climate change and financial crime required cross-border solutions, Moosmayer said. The experiences of the past 12 months had shown how important it was to coordinate risk management locally, regionally and internationally, he said.

“As horrible as the pandemic is, this need to collaborate could overcome the notion that society and companies are seen as separate from each other. This notion comes from a lack of trust. I’m the first one to admit that the companies have their fair share of responsibility in this development, given the corporate scandals that have eroded trust,” he said.

Honesty and humility were important leadership qualities that would be essential to restore trust between the public and the private sectors, Moosmayer told delegates during a keynote address.

“From an ethics, risk and compliance perspective, there will be always failures, in both the private and public sectors, but the question is, should we be afraid of the truth and punish the ones who are open about it? This leads to interesting questions [about] the way … we measure and report risks and ethical behaviour,” he said.

Ethics and risk management

There is a natural link between ethics and good risk management, and risk management will inevitably lead to ethical dilemmas, said Moosmayer, an expert on the intersection between ethics and risk in modern organisations and who chairs the Anti-Corruption Task Force of the Organisation for Economic Cooperation and Development (OECD).

The conference heard that companies need to move on from the old mindset where organisational culture was based on “making no mistakes”. This type of thinking led to a “lack of psychological safety in speaking up”, which was a “killer” for effective risk management, Moosmayer said.  

“Modern leadership is about giving people clarity about goals they are all working toward, but then also … giv[ing] them the accountability to live and implement it and to learn from [the] mistakes which will happen,” he said.

Organisations are making a transformative step from traditional “hierarchical” management to a new form of effective but service-driven leadership. This service-based model of leadership makes it easier for organisations to respond in uncertain times.

“In such a fundamental crisis, the risk is that the managers and public leaders are getting totally overwhelmed, and are often reduced to day-to-day crisis management. But enterprise risk management, emergency and business continuity management need leaders who still see the ‘big picture’,” he said.

Leadership, trust and foresight

Foresight would be essential if organisations were to learn from the various crises the world has faced and use them as an opportunity to improve and to become more resilient, he said.

The COVID-19 pandemic has shown that organisations need to be prepared for unexpected risks. The risk of a worldwide pandemic may have been included in enterprise risk management models, but usually as an awareness topic, rather than a strategic or operational risk.

“Risk management is about constant learning and adaption. Foresight means we must treat these lessons as an opportunity going forward,” he said.

Corruption remained one of the biggest risk factors for the private and public sectors, making the work of international platforms such as the United Nations, the OECD and the G20/B20 process all the more important, he said.

“Leadership, trust and foresight are needed more than ever and are the basis of a modern and innovative approach to risk management in uncertain times,” he said.

Click here to view Thomson Reuters' video interview with Dr Klaus Moosmayer

Nathan Lynch is an experienced writer, public speaker, manager and technology enthusiast in the field of financial regulation and risk management. At Thomson Reuters, Nathan leads a team of experts who provide breaking news, deep analysis and practical guidance to risk practitioners in the global financial services sector.
Nathan manages Thomson Reuters’ award-winning Regulatory Intelligence team across the Asia-Pacific region, tracking developments in financial services law, regulation, financial crime and risk management.
Nathan has been involved in building innovative, tech-based businesses in the financial services “regtech” sector — including Complinet Australia and the Thomson Reuters Risk business.

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