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Chapter 5 Aligning Risk Appetite with Business Goals ffi rmation . A formal confi rmation or ratifi cation of operational risk management principles is fundamental to the success of a Acompany’s operational risk management (ORM) program. Simply setting up an ORM structure and checklist in an organization is not enough. The key ingredient is the endorsement of ORM from top management. While the tone from the top is extremely important, the tone needs to be more than a pronouncement—it needs to be a call to action for all parts of the organization. Setting an example is one way—and perhaps the best way—for a company’s board or executive committee to validate its support of the ORM framework. One way for a board or executive committee to set an example is to add its own risk appetite and risk objectives to its list of business goals and objectives. By linking risk objectives to busi- ness objectives, a company’s top management clearly demonstrates to all company employees the seriousness of managing operational risk. Furthermore, it is easy for a company to write words and call them principles. It is diffi cult and more signifi cant for a company to act 81 82 w h e r e w e w a n t t o b e according to those principles. Acting according to principles by top management is often called “ providing the tone from the top.” Famous for the Wrong Reason Founded in Omaha, Nebraska, in 1931, Northern Natural Gas Company reorganized itself in 1979 and then, after purchasing Houston Natural Gas, changed its name to Enron in 1985. The company was considered an energy powerhouse, distributing electricity and gas plus