May 23, 2012
From the Audit Committee Institute
It used to be that exercising good judgment largely meant "using common sense." But today, while common sense is still essential, exercising good judgment -- consistently -- in a business environment that is increasingly complex and dynamic, volatile and uncertain, and under high pressure requires a disciplined process.
It also requires an understanding of common traps and biases, like "groupthink," that can undermine the judgments of even seasoned professionals and boards.
This article highlights key recommendations in Enhancing Board Oversight: Avoiding Judgment Traps and Biases -- a new COSO paper co-authored by KPMG and Brigham Young University professors Steven M. Glover and Douglas F. Prawitt -- on keys to a robust professional judgment process, including "where things can go wrong."