The accessibility and fluidity of social media leaves organisations open to significant risks. But there are countermeasures organisations can take to prevent reputation disaster.
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 ]
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.”
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.
Pressure is mounting for organizations to not only detect threats, but to also prevent them—before they can affect critical business processes or sensitive data. These potential threats include enterprise’s brand equity, competitive posture and reputation.
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 ]
Supply chain risk is an increasingly common topic and for good reason: Almost any disruption—weather event, supply failure, technology glitch, financial fiasco—can affect a company’s ability to manage its supply chain. Accenture discusses the many forms of risk, surveys risk management technologies and introduces a five-step risk management program.
Risk-averse midlevel managers making routine investment decisions can shift an entire company’s risk profile. An organization-wide stance toward risk can help.
Some types of risk pose a peskier problem than others for the success of complex projects, but the outcome of large-scale initiatives ultimately rests on how capably managers and their subordinates can detect and respond to unforeseen emergencies. Changing requirements for the project, shifting customer needs, and communication breakdowns are the most frequent and damaging types of risk.
In a highly competitive environment, companies can focus too much attention on maximizing profits in the short term, while neglecting basic principles of the risk management process. Many bankruptcies, including those of big and successful companies listed on the New York Stock Exchange (NYSE), have stemmed from a failure to plan for the downside of risk. Enterprise stability and a company’s chance for survival can … [ Read more ]
A new study finds that underestimating strategic risk is the number one cause of shareholder value destruction. But it doesn’t have to be.
Numerous companies’ attempts to engage directors in risk management have failed either because those attempts themselves were not properly conceived or directors – and the companies – lacked specific tools to meaningfully involve directors. These authors advance three highly practical and effective tools that will enable boards to make that meaningful contribution to the risk management discussion.
Disrupter analysis can help assess the risks of future catastrophic events.
Almost all companies today maintain a dedicated team of professionals to manage talent, and many also employ at least a few full-time professionals to manage risk because both are major agenda items for boards and senior executives. But few organizations systematically encourage their talent and risk managers to work together collaboratively to pursue broader goals, specifically enhancing enterprise value.
We believe talent and risk are intimately … [ Read more ]
When one company merges with another, common business wisdom suggests that the newly combined firm has a lower risk of going into default, because the transaction gives the merged corporation greater diversity than the two individual participants. But according to a study by Craig Furfine, a clinical professor of finance at the Kellogg School of Management, and Richard Rosen, of the Federal Reserve Bank of … [ Read more ]
Business models help support strategic goals, but too often executives don’t inject them with the necessary dose of creativity to bring about real success, according to new research by INSEAD professors Karan Girotra and Serguei Netessine.
How rational managers came to be seen as reckless risk takers…
…but have been behaving sensibly all along
Conventional risk management has focused on avoiding the risks to a business strategy, rather than understanding and managing the risks of the strategy itself. While the protection of existing assets is necessary, a diet of pure risk aversion likely will lead to extinction.
To avoid swinging between over-exuberance and excessive caution, set a disciplined target for your desired investment outcomes.
High performance requires a keen understanding of not only a company’s appetite for risk but also its capacity to manage that risk effectively. Companies that walk that fine line between the two can better protect themselves and pursue new marketplace opportunities.