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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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Value Creation Through Risk Management*

Value Creation Through Risk Management*

Chapter:
(p.101) 4 Value Creation Through Risk Management*
Source:
Managing Risk and Opportunity
Author(s):

Torben Juul Andersen

Maxine Garvey

Oliviero Roggi

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199687855.003.0005

This chapter discusses the emerging risk landscape and considers the value creating potential of uncertainty. Assuming a strategic decision-making perspective it is argued that risk management practices can help firms make better decisions for better risk-return outcomes. Effects of imperfect information and cognitive biases are considered, as are different ways to avoid them. It is shown how systematic risk analysis can help reduce information distortion and how these techniques can challenge forward looking strategic plans as well as ongoing project investments. The human limitations in making advance predictions under uncertainty are illustrated by predictable surprises. It is discussed how the value of effective risk management derive from dynamic processes that shield against downside losses and pursue prudent strategic risk-taking for upside potential. The role of innovation in developing upside gain is discussed as is the individual human involvement in these value creating activities. (143 words)

Keywords:   Cognitive biases, Emergent risks, Innovation, Project management, Strategic decision-making

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