How Do Risk Managers Become Influential? A Field Study of Toolmaking and Expertise in Two Financial Institutions

40 Pages Posted: 12 Apr 2012

See all articles by Matthew Hall

Matthew Hall

Monash University - Department of Accounting

Anette Mikes

Harvard Business School

Yuval Millo

London School of Economics & Political Science (LSE) - Accounting Department

Date Written: April 9, 2012

Abstract

In this study, we examine transformations in the influence of risk managers in two large UK banks over a period of six years. Our analysis highlights that a process we term toolmaking, whereby experts create, articulate and shape tools that embody their expertise, is central to the way in which the risk managers in our study garner influence in their organizations. Based on our field study, we identify two dimensions that help to explain experts’ organizational influence: their ability to (a) incorporate their expertise into highly communicable tools; and (b) develop a personal involvement in the deployment and interpretation of those tools in important decision-making forums. Based on experts’ ability to combine and balance these two processes, we distinguish analytically among four positions of influence they can occupy — compliance expert, technical champion, trusted advisor, and engaged toolmaker — and trace the movements of experts between these positions. Our empirical findings and theoretical framework contribute to our understanding of the nature of expert influence and how and why functional groups, such as risk managers, can become influential.

Keywords: risk management, banks, management accounting, experts, organizations

JEL Classification: G21, M41

Suggested Citation

Hall, Matthew and Mikes, Anette and Millo, Yuval, How Do Risk Managers Become Influential? A Field Study of Toolmaking and Expertise in Two Financial Institutions (April 9, 2012). Available at SSRN: https://ssrn.com/abstract=2038292 or http://dx.doi.org/10.2139/ssrn.2038292

Matthew Hall

Monash University - Department of Accounting ( email )

H3.43, Building H, Level 3
Monash University Caulfiled
Melbourne, VIC 3145
Australia

Anette Mikes

Harvard Business School ( email )

Soldiers Field
Boston, MA 02163
United States

Yuval Millo (Contact Author)

London School of Economics & Political Science (LSE) - Accounting Department ( email )

Houghton Street
London WC2A 2AE
United Kingdom

HOME PAGE: http://www.lse.ac.uk/collections/accounting/facultyAndStaff/profiles/Millo.htm

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