The article Don’t Mention It: How ‘Undiscussables’ Can Undermine an Organization in Knowledge@Wharton has some interesting pointers about how and why risks are ignored:

After everything falls apart, the failures to act become obvious: Why didn’t somebody at Penn State do more to pursue allegations that former assistant football coach Jerry Sandusky was sexually abusing young boys? Didn’t anybody at MF Global Holdings notice that something was wrong before $1.2 billion in customer cash disappeared? Why, decade after decade, didn’t anyone at Olympus protest $1.7 billion in accounting irregularities?

So, why does this happen? The article lays out the following scenarios:

• Lack of Clarity: Problems are not obvious to everyone, many have self doubts
• Fear of Retribution: Difficult to point a finger at the boss or his peers
• Group Loyalty: Protecting the team
• Group Dynamics: Desire to not stir the water

So what we R&D managers do to ameliorate this?  The article suggests the following (very hard to do, and almost impossible to do well):

Companies should also establish metrics, routines, audits and incentives to help identify problems and suggest areas of change, says Wharton management professor Lawrence G. Hrebiniak, who has acted as a consultant to dozens of companies such as General Electric, AT&T, Microsoft and DuPont. When top management diligently works to measure performance, elicit feedback and respond openly to problems when raised, it can usually make progress, Hrebiniak has found. “Control systems are important to implementing strategy and identifying problems,” he says.

The problem, of course, is with the senior leadership that makes topics undiscussable:

When companies have a culture in which managers are “more interested in hiding things than solving problems,” there is little anyone can do to help, Hrebiniak says. “You need top management to react strongly. If they bury the stuff, they’re dead.