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The Actuary The magazine of the Institute & Faculty of Actuaries

Put honesty on the balance sheet

The overbooking of reserves at Shell was described recently by Lord Oxburgh, the UK chairman, as ‘attributable to human failings, it is not structural’.

I recently worked with a group of more than 30 chief investment officers, managing more than a trillion dollars of pension-fund assets, to review 20 corporate scandals and decide the importance of personal integrity (or the lack of it) as a contributing factor. The CIOs felt that personal integrity was important in more than 90% of the cases reviewed. When asked what should be done about it, many said that not only should personal integrity be assessed at board and senior officer level, but also for all employees!

Lord Oxburgh is right to talk of ‘human failings’, but I believe that he and other business leaders have failed to accept the ‘structural’ responsibility of good corporate governance, to ensure that those who are in positions of leadership and trust are selected and developed on the basis of their integrity.

For those interested in understanding how this might be done, you can take a free online ‘integrity test’ at www.rogersteare.com!