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Managing Risk and OpportunityThe Governance of Strategic Risk-Taking$
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Torben Juul Andersen, Maxine Garvey, and Oliviero Roggi

Print publication date: 2014

Print ISBN-13: 9780199687855

Published to Oxford Scholarship Online: June 2014

DOI: 10.1093/acprof:oso/9780199687855.001.0001

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Risk, Uncertainty, and Proactive Risk-Taking*

Risk, Uncertainty, and Proactive Risk-Taking*

(p.35) 2 Risk, Uncertainty, and Proactive Risk-Taking*
Managing Risk and Opportunity

Torben Juul Andersen

Maxine Garvey

Oliviero Roggi

Oxford University Press

This chapter revisits the risk concept and lays out its roots in insurance and financial management. Uncertainty is considered as an essential source of entrepreneurial value creation. Externally imposed risk factors are introduced, as are internal deficiencies in observing and responding to them. Payment flows and commercial transactions are linked to illustrate the conjoint exposures across financial and real markets. The advance identification of underlying risks reduces uncertainty although unexpected elements of future events always remain. Systematic approaches to classify risks can increase risk awareness and the handling of foreseeable events. However, dealing with uncertainty and unforeseeable events requires different approaches that enable effective responses to emergent risks. Asset valuation principles can help assess alternative hedging, mitigation, and responsive actions in support of more disciplined risk choices. The prevalent risk management frameworks have evolved in line with predominant risk perceptions and also reflect their limitations. (145 words)

Keywords:   Asset valuation, Risk classification, Risk factors, Risk profile, Uncertainty, Value creation

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