Nestlé’s Half-Billion-Dollar Noodle Debacle in India

Nestlé spent three decades building a beloved noodle brand in India. Then the world’s biggest food and beverage company stumbled into a public relations debacle that cost it half a billion dollars. A cautionary tale of mangled crisis management on an epic scale.

Preventing Social Media Armageddon

The accessibility and fluidity of social media leaves organisations open to significant risks. But there are countermeasures organisations can take to prevent reputation disaster.

Tucker Bailey, James M. Kaplan, Chris Rezek

When companies think about cybersecurity […] most ask, “How can we protect ourselves and comply with standards or regulations?” instead of “How do we make confident, intelligent investments given the risks we face?” Many also treat cybersecurity primarily as a technology function rather than integrating it into business operations. As a result, they get the wrong answer about how to construct a cybersecurity program.

What Have the Past 30 Years Taught Us About Managing Risk?

The problem with many catastrophic risks isn’t just that their impacts, when they hit, are so massive. It’s also that their odds of occurring in any given short time frame are very small, so that planning for them has to be handled as a long-term priority while the proverbial sun is shining. And neither companies nor individuals are particularly apt at taking serious, long-term action … [ Read more ]

Pragmatic Risk Management in a Tightly-Coupled World

Globalization has created new opportunities and new threats. As sourcing from around the world made supply chains longer and more complex, the volatility inherent in production significantly increased. The number of supply chain members and the interactions among them has grown, exacerbating the lack of transparency in the operating environment. Company executives have increased profitability through ever-shorter times-to-market and product life-cycles, business processes improvement, just-in-sequence … [ Read more ]

Gerd Gigerenzer

Just imagine, a few centuries ago, who would have thought that everyone will be able to read and write? Now, today, we need risk literacy. I believe if we teach young people, children, the mathematics of uncertainty, statistical thinking, instead of only the mathematics of certainty – trigonometry, geometry, all beautiful things that most of us never need – then we can have a new … [ Read more ]

Gerd Gigerenzer

We need statistical thinking for a world where we can calculate the risk, but in a world of uncertainty, we need more. We need rules of thumb called heuristics, and good intuitions. That distinction is not made in most of economics and most of the other cognitive sciences, and people believe that they can model or reduce all uncertainty to risk.

The Art of Risk Management

Risk management isn’t just a matter of complex financial models and formal risk-management systems. It is an essential value-creating activity that should inform the strategic debate at every level of the organization. Here are ten basic principles that should govern “the art of risk management.”

David Greenberg

The future of risk management lies in an ability to incorporate and inspire more of the behaviors we want, finding new models to map, monitor, intervene, support, and react to the behaviors of individuals and groups—both the behaviors we want to encourage and those we’d like to avoid. Critically, this taking account of behavior means that we need a much sharper comprehensive strategy for corporate … [ Read more ]

From Risk to Resilience: Using Analytics and Visualization to Reduce Supply Chain Vulnerability

Complex supply chains require sophisticated, connected tools to monitor risks, predict disruptions, and support rapid recovery as part of an overall resilience strategy. For leading companies, this line of thinking has led to an increase in adoption of advanced tools grounded in analytics and visualization.

Nassim Nicholas Taleb

Rank beliefs not according to their plausibility but by the harm they may cause.

Instinct Can Beat Analytical Thinking

Researchers have confronted us in recent years with example after example of how we humans get things wrong when it comes to making decisions. We misunderstand probability, we’re myopic, we pay attention to the wrong things, and we just generally mess up. This popular triumph of the “heuristics and biases” literature pioneered by psychologists Daniel Kahneman and Amos Tversky has made us aware of flaws … [ Read more ]

Field Marshal Erwin Rommel

If you can recover from the loss, it’s a risk. If not, it’s a gamble.

Gökçe Sargut, Rita Gunther McGrath

Simple decision rules, structures and relationships are not likely to be effective approaches when the task at hand involves making decisions in the context of complex systems. Ironically, many of our most embedded management practices—such as designing for optimization and for efficiency—only exacerbate the risks of things going wrong at a systems level. Somewhat counter-intuitively, the most robust complex systems are often not designed for … [ Read more ]

Risk Test: 7 Answers You Need to Know

Ensuring that a company’s risks are effectively identified, evaluated, and managed is among the most important responsibilities of a board of directors. The science of risk management continues to evolve. Lessons learned from past failures are being leveraged to ensure that a company’s risk management is built on the right foundation and evolving in the right direction. By asking the following seven questions today, directors … [ Read more ]

Ulrich Beck

In risk conflicts, the central question of power is a question of definition. It is the question of who, with what legal and intellectual resources, gets to decide what counts as a ‘risk’, what counts as a ‘cause’, and what counts as a ‘cost’. The question of determining who is responsible, and who has to bear the burden of paying for damages, has been transmuted … [ Read more ]

Ulrich Beck

Risk acceptability depends on whether those who carry the losses also receive the benefits. Where this is not the case, the risk will be unacceptable to those affected. If even the benefit is in dispute it is not enough to demonstrate that the ‘residual risk’ is, statistically speaking, highly improbable. A risk cannot be considered in and of itself. It is always framed by the … [ Read more ]

Ulrich Beck

Technical experts have lost their monopoly on rationality in the original sense: they no longer dictate the proportions by which judgment is measured. Statements of risk are based on cultural standards, technically expressed, about what is still and what is no longer acceptable. When scientists say that an event has a low probability of occurring, and hence is a negligible risk, they are necessarily encoding … [ Read more ]

Christian Gollier

How can we decide whether a risk is acceptable to society? Using the language of cost-benefit analysis, we can say that the risk is acceptable if its benefits to society exceed its costs. But to say this is merely to re-state the problem, for by assumption the benefits and costs are uncertain. Where these benefits and costs have known probabilities, and where individuals can diversify … [ Read more ]