Charette's message is - it does not have to be this way. There are companies leading the way on innovation, decision making and leadership, and other organizations must take a leaf out of their book. Take Rockwell Collins. Charette recently wrote a detailed case study - Profiting from Risk: A Transformation of One Company's Risk Culture - describing how Rockwell Collins has corporate leadership, decision-making ability and innovation in spades. It is a model of a company that will thrive in the high-risk society we find ourselves in, he says.

"It is not too much of an exaggeration to say that Rockwell Collins represents a 21st-century archetypal company: one that has learned to embrace and profit from risk," the case study reads. "Michael Mandel, chief economist at BusinessWeek, wrote in his book High-Risk Society, 'Over the long run, success will go to the people, companies and countries willing and able to accept uncertainty. Three qualities help people thrive with risk: (1) the right psychological attitude, (2) sufficient financial resources to absorb setbacks, and (3) enough smarts to manage the risks they have taken'. Collins has achieved all three."

Although many companies hold the same risk culture as Collins, few live it as Collins does, Charette concludes. Today Rockwell Collins's ability to manage strategic, financial and technical risk strategically and aggressively is a core corporate strategic advantage for the organization. And that ability served it well when the company found itself facing severe trouble five years ago.

Collins, a successful and growing commercial and defence avionics company, had just finished a corporate spin-off from its parent Rockwell International when the terrorist attacks of September 2001 hit. Indeed when the 9/11 events occurred, Collins had been operating independently for barely 10 weeks. It cancelled more than $US350 million in sales - orders amounting to more than 20 percent of its business - in days. Collins's leadership quickly assessed the radically changed business environment and, fewer than 10 days later, took the needed steps to assure its shareholders the company could survive.

"Whereas the 9/11 events whipsawed other avionics companies, Collins's risk management capability allowed it not only to survive but also to position itself to maintain steady growth in the face of such adversity," Charette writes.

A Long, Long Road

But the company's climb to the top of the risk management summit was neither a short, nor a seamless exercise.

"What's interesting about Rockwell Collins is that if you go back about 15 years ago, although they were seen as an innovative company, they weren't one that you would look at and say, well, they manage risk extremely well. They may have managed their technical risk, but they weren't seen as managing risks in a holistic fashion, meaning their management risks, their technical risks, their financial risks, and the like," Charette says. "What they did is they embarked on changing their culture from one that was admittedly risk-adverse to one that is today considered, in my terminology, risk-entrepreneurial."

Collins, like many engineering companies of the time, promoted line engineers into management positions, mostly based on their demonstrated ability to lead small engineering groups. Both the training and the success in engineering of Collins's engineers-turned-business-managers stopped them applying risk management outside that technical context.

In addition, to quote a senior manager, Collins engineers "cloak[ed] themselves in virtue", meaning they believed only they knew the best way to get results.

The people who moved into business were not stupid; these were many of the best and brightest within a company chock-full of high-calibre talent. But the demands of the changing business environment were severe and challenging for anyone, and even greater for new leaders lacking the critical combination of direct business experience and business process.

Collins senior government and defence management knew that "engineering oneself out of trouble" would lead to more problematic programs, and so started the planned thrust that started the company on its proactive management-of-risk path.