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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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The Strategic Risk-Taking Organization*

The Strategic Risk-Taking Organization*

Chapter:
(p.132) 5 The Strategic Risk-Taking Organization*
Source:
Managing Risk and Opportunity
Author(s):

Torben Juul Andersen

Maxine Garvey

Oliviero Roggi

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199687855.003.0006

In this chapter we distinguish between problems, risks, and uncertainty. Applying general risk management principles to deal with problems can either over- or undershoot the analytical rigor leading to excessive bureaucracy and/or pretended surety where none exists. Uncertainty requires approaches distinct from conventional risk management techniques including scenario analysis and real options reasoning as well as search through experimentation and active learning. The human element is essential to create risk awareness as a driver of proactive risk behaviors. Decision structures and information processing capabilities should allow for both central integrative analysis as well as decentralized responses to deal with emergent risks. Hence, effective risk management goes beyond conventional ERM frameworks and combine decentralized responses with central exposure management. It is insufficient to manage foreseeable risks we must also be able to deal with the unexpected events. (136 words)

Keywords:   Communication, Decision structure, Incentives, Management controls, Organization

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