176 Posts Found

Humans are gambling animals—and not just when we invest in the stock market. Every time we take an action—deciding which job applicant to hire, which product to launch— we are betting our time, reputation, effort, and money in the hope of achieving some future result.

Some people base their business bets on dumb luck, but the great ones. Eileen C. Shapiro and Howard H. Stevenson have … [ Read more ]

Content: Book | Authors: Eileen Shapiro, Howard Stevenson | Subjects: Management, Risk Management

Cost-benefit analysis can be an effective tool to analyze simple, one-dimensional problems, such as whether to install dividers on dangerous stretches of highway, where relatively unambiguous data is in abundant supply and there is little controversy. It also is a good way to elucidate the trade-offs for a given policy or regulation, or to produce a summary statistic about its economic efficiency.

But the cost-benefit method … [ Read more ]

Content: Quotation | Author: Denise Caruso | Source: strategy+business | Subjects: Decision Making, Risk Management, Trends / Analysis

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How should we think about risk vs. uncertainty? A logical starting place is Frank Knight’s distinction: risk has an unknown outcome, but we know what the underlying outcome distribution looks like. Uncertainty also implies an unknown outcome, but we don’t know what the underlying distribution looks like. So games of chance like roulette or blackjack are risky, while the outcome of a war is uncertain. … [ Read more ]

Content: Quotation | Author: Michael J. Mauboussin | Source: Rotman Magazine | Subject: Risk Management

A plan is only a scenario, and almost by definition, it is optimistic. Any complex undertaking is subject to myriad problems — from technology failures to shifts in exchange rates to bad weather — and it is beyond the reach of the human imagination to foresee all of them at the outset. Although the probability of any one of these events could be low, the … [ Read more ]

Content: Quotation | Author: Daniel Kahneman | Source: Rotman Magazine | Subjects: Personality / Behavior, Planning, Risk Management

In many cases, what looks like risk-taking doesn’t take courage at all; it’s just unrealistic optimism. Courage is a willingness to take the risk once you know the odds; optimistic overconfidence means you are taking the risk because you don’t know the odds. There’s a big difference.

Content: Quotation | Author: Daniel Kahneman | Source: Rotman Magazine | Subjects: Personality / Behavior, Risk Management

Why the risk of wrongdoing has migrated from senior executives to middle management — and what to do about it.

Content: Article | Author: David M. Katz | Source: CFO Publishing | Subjects: Accounting, Finance, Management, Risk Management

The Spring 2007 issue of Rotman magazine contains 124 pages of varying quality articles and other information. I personally recommend reading the following:
– Thought Leader Interview: Daniel Kahneman
– Countering the Biggest Risk of All by Adrian Slywotzky and John Drzik
– Bounded Awareness by Dolly Chugh and Max Bazerman
– Hull’s Laws: What we can learn from derivatives mishaps by John Hull
– A Primer on the Management … [ Read more ]

Content: Article | Source: Rotman Magazine | Subjects: Management, Miscellaneous, Organizational Behavior, Risk Management

Highly differentiated strategies, either low cost or product leadership, offer the promise of high returns, but only because they run higher strategic risk. Staking a defensible claim to a unique competitive position demands bold commitments over long periods of time to assets and capabilities that few others feel will be valuable in the future. In other words, greatness requires that companies make a significant, and … [ Read more ]

Content: Quotation | Author: Michael E. Raynor | Source: Ivey Business Journal | Subjects: Risk Management, Strategy

Uncertainty is a business perennial, and making decisions in uncertain times is a staple on the manager’s agenda; it comes with the territory. But decision-making can be made easier, particularly when a manger has a framework to analyze the uncertainty and determine how he or she should go forward. This author describes a dynamic, highly useful framework managers can use.

Content: Article | Author: Bhaskar Chakravorti | Source: Ivey Business Journal | Subjects: Management, Risk Management

Complacency, complexity and strained legacy systems are conspiring to raise the risk of an unexpected IT disaster to alarming levels. Standard backup policies and redundant systems are no longer enough. What’s needed now is a strategic emphasis on rapid and well-rehearsed recovery.

Content: Article | Authors: Gary A. Curtis, Gil Brodnitz, Robert Emmel | Source: Outlook Journal (Accenture) | Subjects: IT / Technology / E-Business, Risk Management

Michael Regester talks about managing situations that may turn into crises and handling crises once they occur.

Content: Article | Authors: James Nelson, Michael Regester | Source: Emerald for Managers | Subjects: Management, Risk Management

“Shadowed by peril as we are, you would think we’d get pretty good at distinguishing the risks likeliest to do us in from the ones that are statistical long shots. But you would be wrong.” Despite its misleading title, this article explores the human (not just American) tendency to get calculations of risk wrong.

Content: Article | Author: Jeffrey Kluger | Source: TIME | Subjects: Organizational Behavior, Risk Management

We pride ourselves on being the only species that understands the concept of risk, yet we have a confounding habit of worrying about mere possibilities while ignoring probabilities, building barricades against perceived dangers while leaving ourselves exposed to real ones.

Content: Quotation | Source: TIME | Subjects: Decision Making, Risk Management

Financial theory would say that companies diversify to reduce risk, but in the business world diversification is done not to hedge risk but to sustain top-line growth. The riskiest companies-the start-ups and early-stage companies-are intensely focused. Companies begin thinking about diversification only when their growth has plateaued and opportunities for expansion in the original business have been depleted.

Content: Quotation | Source: McKinsey Quarterly | Subjects: Risk Management, Strategy

You’re insured and hedged against many risks-but not the greatest ones, the strategic risks that can disrupt or even destroy your business. Learn to anticipate and manage these threats systematically and, in the process, turn some of them into growth opportunities.

Content: Article | Authors: Adrian J. Slywotzky, John Drzik | Source: Harvard Business Review | Subjects: Risk Management, Strategy

True, strategic change is something that’s played out over a longer time period.

This means that folks who are responsible for shorter time periods actually don’t need to worry much about “strategic uncertainty” and in fact should not worry much about strategic uncertainty. Why? Because somebody needs to actually deliver on the strategy that’s in place.

The problem I think in a lot of organizations is … [ Read more ]

Content: Quotation | Source: Ivey Business Journal | Subjects: Risk Management, Strategy

A flipside of risk is trust. Trust is implicit in any dialogue between a company and its shareholders or any of its stakeholders. Trust is implicit in any discussion about the future in conditions of uncertainty…Any increased understanding of risk will tend to increase trust; while a dialogue that is risk-blind will tend to decrease trust especially over time as the unexpected inevitably occurs. By … [ Read more ]

Content: Quotation | Source: European Business Forum (EBF) | Subjects: Risk Management, Trust

Start-ups tend to be enormously resource constrained. Typically they are not able to devote money and time to the problems of strategic uncertainty. As a result, start-ups tend to be “bet the farm” propositions: high risk, with the potential of high reward. Such firms don’t manage strategic risk, they accept it.

The degree to which you manage risk will be a function of your ability … [ Read more ]

Content: Quotation | Author: Guy Kawasaki | Source: How to Change the World | Subjects: Entrepreneurship, Risk Management

Unfortunately, in many companies, the CFO is handling financial risk, the CEO is handling strategic risk, and the COO is handling operational risk, but no one is looking at all those risks as one.

Content: Quotation | Source: Business Finance Magazine | Subject: Risk Management