176 Posts Found

This publication provides information on the board’s role in risk oversight and includes six areas of focus coupled with action-oriented steps to take, along with questions for management, and tools that may help a board execute on its risk oversight responsibilities.

Content: Article | Source: Deloitte | Subjects: Corporate Governance, Risk Management

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We as executives have to resist our natural tendency to avoid or minimize risks. This instinct leads executives to choose to copy successes rather than try to create something brand-new… If you want to be original, you have to accept the uncertainty, even when it’s uncomfortable, and have the capability to recover when your organization takes a big risk and fails.

Content: Quotation | Author: Ed Catmull | Source: Outlook Journal (Accenture) | Subjects: Innovation, Organizational Behavior, Risk Management

When this regular Ivey Business Journal contributor recommends a certain book, executives can be assured that they will derive value from the book. Even if it is a black swan.

Content: Article | Author: John McCallum | Source: Ivey Business Journal | Subjects: Management, Risk Management, Statistics

You needn’t be a seer or sage to perceive risk. It’s as predictable and as devastating as a Florida hurricane and as far-reaching as a corporate scandal. But you do need to be a visionary to see the opposite side of the risk coin, the one that lands face down after you flip. The underside represents opportunity, competitiveness and growth.

What do these things have to … [ Read more ]

Content: Article | Authors: Mark Layton, Steve Wagner | Source: Deloitte Review | Subject: Risk Management

Unrewarded risk represents what poker players call “table stakes”: you’ve got to ante up just to get into the game. The ante, of course, doesn’t guarantee success; it only ensures that a hand of cards will be dealt to you. Numerous examples of unrewarded risk appear in business. For instance, every public company in the United States must comply … [ Read more ]

Content: Quotation | Authors: Mark Layton, Steve Wagner | Source: Deloitte Review | Subject: Risk Management

Evaluating country risks is a crucial exercise when deciding where to set up operations in a foreign country. While some risks can be managed with insurance or hedging strategies, others can be measured with a risk-analysis. Though uncertainty will remain in either case, it can be transformed into planned uncertainty, with no surprises in store and contingency plans in place. The author discusses the analytical … [ Read more ]

Content: Article | Author: David Conklin | Source: Ivey Business Journal | Subjects: International, Risk Management

Why are we constantly surprised by the emergence of crises such as the current financial meltdown, and what are the lessons that we can apply when tackling these? According to INSEAD professor Mike Pich, it all boils down to risk and uncertainty – or at least a lack of understanding of the fundamental principles of risk.

Content: Article | Authors: Karen Cho, Mike Pich | Source: INSEAD Knowledge | Subject: Risk Management

Risk managers armed with the most sophisticated quantitative tools available did not foresee the biggest development in a generation — the systematic breakdown and global contagion of financial markets. In an interview with Knowledge@Wharton, John Drzik, president and CEO of the Oliver Wyman Group, Richard J. Herring, a finance professor at Wharton, and Francis X. Diebold, a Wharton professor of economics, finance and statistics, discussed … [ Read more ]

Content: Article | Source: Knowledge@Wharton | Subject: Risk Management

This year, companies are reluctant to make predictions about their financial performance in the months ahead. The problem, according to the companies, is not that they don’t want to present a gloomy picture; it is that they just don’t know how the economy will perform. Risk management models have been criticized for failing spectacularly to predict or prepare firms for the crisis now shaking the … [ Read more ]

Content: Article | Source: Knowledge@Wharton | Subject: Risk Management

We tend to forget that the computer only answers questions; it does not ask them…. Those who live only by the numbers may find that the computer has simply replaced the oracles to whom people resorted in ancient times for guidance in risk management and decision-making.

Content: Quotation | Author: Peter Bernstein | Source: Knowledge@Wharton | Subject: Risk Management

We have seen a tendency to separate risks into rigid silos — operational risk, market risk, credit risk and so on. But what we have found is that major shocks and problems do not come that way. For instance, in the financial world, you would see trading desks staffed with people who were experts in market risk, but they were trading instruments that were laden … [ Read more ]

Content: Quotation | Author: Richard J. Herring | Source: Knowledge@Wharton | Subject: Risk Management

The great unspoken issue is about payoffs, and the degree to which payoffs are skewed in an industry. In an industry with many players, low barriers to entry and where only a small number will make a lot of money, the payoffs are highly skewed. If this is the case, you cannot afford to take a conservative approach. So winning is not about limiting the … [ Read more ]

Content: Quotation | Author: Phil Rosenzweig | Source: Knowledge@Wharton | Subject: Risk Management

Risk—particularly supply chain risk—has become ubiquitous as globalization causes supply chains to lengthen. Accenture and Oracle combine forces to provide a point of view that will help companies understand the nature of supply chain risk—and what they can do to mitigate it.

Content: Article | Sources: Accenture, Oracle | Subjects: Operations, Risk Management

Companies compete in a multi-polar world—an environment characterized by a new and more complex phase of increased economic interdependence across multiple centers of economic power and activities. Accenture research into global operations reveals that succeeding in this environment demands a new way of thinking about global operations. In particular, it points to five guiding principles that can position companies for high performance on this new … [ Read more ]

Content: Article | Authors: Christophe Cases, Greg Cudahy, Narendra Mulani | Source: Accenture | Subjects: International, Operations, Risk Management

The field of statistics is based on something called the law of large numbers: as you increase your sample size, no single observation is going to hurt you. Sometimes that works. But the rules are based on classes of distribution that don’t always hold in our world.

All statistics come from games. But our world doesn’t resemble games. We don’t have dice that can deliver. Instead … [ Read more ]

Content: Quotation | Author: Nassim Nicholas Taleb | Source: McKinsey Quarterly | Subjects: Finance, Risk Management, Statistics

I don’t like scenario planning, because people don’t think out of the box. So scenario planning may focus on four, five, or six scenarios that you can envision, at the expense of others you can’t. Instead of looking at scenarios and forecasts, you should be looking to see how fragile your portfolio is. How vulnerable are you to model error? How vulnerable is your cash … [ Read more ]

Content: Quotation | Author: Nassim Nicholas Taleb | Source: McKinsey Quarterly | Subjects: Future, Risk Management, Strategy

There is a tendency in our planning to confuse the unfamiliar with the improbable. The contingency we have not considered seriously looks strange; what looks strange is thought improbable; what is improbable need not be considered seriously.

Content: Quotation | Author: Thomas C. Schelling | Source: Pearl Harbor: Warning and Decision (Foreword) | Subjects: Decision Making, Planning, Risk Management, Strategy

Loss aversion wouldn’t have such a large effect on decisions made in times of uncertainty if people viewed each gamble not in isolation but as one of many taken during their own lives or the life of an organization. But executives, like all of us, tend to evaluate every option as a change from a reference point – usually the status quo – not as … [ Read more ]

Content: Quotation | Authors: Dan P. Lovallo, Olivier Sibony | Source: McKinsey Quarterly | Subject: Risk Management

The discovery of black swans in Western Australia was a shock for scientists. Today those unexpected birds have become a symbol for the disruption of the bell curve that is used for most forms of variation. Bhopal, Exxon Valdez and Société Générale have shown that, in business, the highly improbable can occur, with devastating consequences. In this article the authors take a closer look at … [ Read more ]

Content: Related Content | Authors: David Lyon, Eleonor Kramarz, Geoff Stevens, Philip W. Beall, Rodolfo Guzman | Source: Prism (Arthur D. Little) | Subject: Risk Management