Today’s more uncertain environment calls for newer, more dynamic approaches to risk management and strategic planning. Successful companies foster a culture of strategic humility, anticipatory preparedness, and a willingness to act to own the future as it unfolds. And they have four critical characteristics:
- They see risk as a two-sided coin with challenge on one side and opportunity on the other.
- They explore the strategic implications of
Content: Article | Authors: Alan Iny, Elton Parker, Jeanne Kwong Bickford, Nick D'Intino | Source: “Boston Consulting Group (BCG)” | Subjects: Risk Management, Strategy
To stay operational, even in the worst of times, focus on what matters most. It will change your risk culture.
Content: Article | Authors: Bobbie Ramsden-Knowles, David Stainback, James Houston, Paul Williams | Source: “strategy+business” | Subject: Risk Management
Understanding the underlying risks should be a particular focus in project selection. Research has shown time and again that human beings are weak at risk assessment, but some techniques can help. A good starting point can be to frame the discussion in terms of a base question: What do we need to believe in to make this an attractive investment? This framing can help uncover … [ Read more ]
Content: Quotation | Authors: Sebastian Stange, Ulrich Pidun | Source: “Boston Consulting Group (BCG)” | Subjects: Management, Project Management, Risk Management
We worry that in their headlong embrace of formal systems of risk management, many companies are pursuing a highly technical approach to risk management—characterized by complex financial models and elaborate, formal risk-management systems—in isolation from the day-to-day activities of the broader organization. The result is that risk management may exist as a formal function, but it is not really embedded in the “mindset” of the … [ Read more ]
Content: Article | Authors: Alexander Roos, James Tucker, Marc Rodt, Sebastian Stange, Ulrich Pidun | Source: “Boston Consulting Group (BCG)” | Subject: Risk Management
When major threats are looming, but their timing is uncertain, it’s hard for business leaders to make an action plan for dealing with them. Wharton marketing professor emeritus George Day and global management consultant Roger Dennis call it “the paradox of preparedness.” In this essay, they offer four steps to help leaders heed the warning signs of disaster before it’s too late.
Content: Article | Authors: George Day, Roger Dennis | Source: “Knowledge@Wharton” | Subject: Risk Management
Most people view luck as the opposite of determinism, control, or strategic intent. But because we can often influence situations in which chance plays a role, these forces are actually linked. The first challenge is to reframe your views about luck and realize that it usually entails much more than random chance. Yes, the primary force behind luck is the way that probabilities play out, … [ Read more ]
Content: Article | Author: Paul J.H. Schoemaker | Source: “Management and Business Review (MBR)” | Subjects: Management, Risk Management
Enhanced perception and thinking about risk in new ways can help leaders navigate tumultuous times.
Content: Article | Author: Eric McNulty | Source: “strategy+business” | Subject: Risk Management
Have our institutions become too complex to secure?
Content: Article | Authors: Richard Horne, Sean Joyce | Source: “PwC” | Subjects: Corporate Governance, IT / Technology / E-Business, Risk Management
Ignoring high-consequence, low-likelihood risks can be damaging to an organization, but preparing for everything is impossibly costly. Here is how leaders can make the right investments.
Content: Article | Authors: Fritz Nauck, Leigh Weiss, Ophelia Usher | Source: “McKinsey Quarterly” | Subject: Risk Management
We have to reengineer how we evaluate people, particularly in risky contexts. Rather than “you are your numbers,” take a holistic performance view. How do we make sure noble failures get rewarded and dumb luck does not?
Content: Quotation | Author: Chris Bradley | Source: “McKinsey Quarterly” | Subjects: Human Resources, Management, Organizational Behavior, Risk Management
Dan Lovallo is a professor who works in applying psychology on biases to management topics. A simple test he did at an investment bank showed that if you applied the CEO’s risk tolerance to all the investment decisions made at lower levels rather than the more junior decision makers’ risk tolerance, the decisions would have had a 32 percent better outcome. So, there is this … [ Read more ]
Content: Quotation | Author: Chris Bradley | Source: “McKinsey Quarterly” | Subjects: Management, Organizational Behavior, Risk Management, Strategy
What most crisis communication systems neglect is closing the loop with colleagues in the same careful manner as they do with their customers.
Content: Quotation | Source: “First Round Review” | Subject: Risk Management
If luck is what happens when opportunity meets preparation, a crisis is difficulty meeting unreadiness. You can’t avoid every iceberg, but you can add a few more safety boats.
Content: Quotation | Author: Krista Berlincourt | Source: “First Round Review” | Subject: Risk Management
A Russian roulette equation — usually win, occasionally die — may make financial sense for someone who gets a piece of a company’s upside but does not share in its downside. But that strategy would be madness for Berkshire. Rational people don’t risk what they have and need for what they don’t have and don’t need.
Content: Quotation | Author: Warren Buffett | Subjects: Corporate Governance, Risk Management
CARVER is a system for assessing and ranking threats and opportunities. Developed during World War II, CARVER (then one letter shorter and known as CARVE) can be both offensive and defensive, meaning it can be used for identifying your competitors’ weaknesses and for internal auditing. In addition, many security experts consider it the definitive assessment tool for protecting critical assets.
Since it draws on both qualitative … [ Read more ]
Content: Article | Author: Luke Bencie | Source: “Harvard Business Review” | Subject: Risk Management
In the early days of building a company, it’s hard to step back and think about the bigger picture when there are always so many fires to fight or opportunities to chase down. That’s a shame, because looking at your business from a 50,000-foot view often reveals areas of misplaced focus or resource misallocation.
One technique that can break through the bubble of always being in … [ Read more ]
Content: Article | Author: Leo Polovets | Subjects: Entrepreneurship, Risk Management
The critical question for executives concerned with their organization’s risk appetite is whether they are trusting their employees, at all levels, to make big enough bets without subjecting them to red tape.
Content: Quotation | Authors: Julie Goran, Laura LaBerge, Ramesh Srinivasan | Source: “McKinsey Quarterly” | Subjects: Management, Organizational Behavior, Risk Management
After watching other founders – including myself – flail about, pivoting their way through the darkness, I’ve become obsessed with being more systematic and disciplined about entrepreneurship. So I decided to take Leo Polovets’ lead and standardize risk management into a single spreadsheet, which you can copy, download, or remix.
Content: Article | Author: Josh Smith | Subjects: Entrepreneurship, Risk Management
In our experience, it helps to think of a crisis in terms of “primary threats” (the interrelated legal, technical, operational, and financial challenges that form the core of the crisis) and “secondary threats” (reactions by key stakeholders to primary threats). Ultimately, the organization will not begin its recovery until the primary threats are addressed, but addressing the secondary threats early on will help the organization … [ Read more ]
Content: Quotation | Authors: Mihir Mysore, Sanjay Kalavar | Source: “McKinsey Quarterly” | Subjects: Management, Risk Management
Nonfinancial risk has typically been addressed by one-off showcase initiatives based on a specific regulation or requirement, and left to experts in each field. What principles exist typically focus on adhering to formal standards and providing evidence that appropriate controls are in place. They are usually not embedded into the business but are instead delegated to risk and compliance departments, which have a limited understanding … [ Read more ]
Content: Quotation | Authors: Joseba Eceiza, Piotr Kaminski, Thomas Poppensieker | Source: “McKinsey Quarterly” | Subject: Risk Management