The greater the control you have over risk, the more finely you can judge the risk, and the more money you can make. But, how much control do you have – can you have?
How can a CEO influence staff to do the right thing consistently? Safeway has created an environment where its employees are given incentives for managing risk – being risk managers.
Companies differ enough from hives that we’ll probably never be able to do without regulation. Managing for practical scale, long-term success, distributed decision making, diversity and least worst outcomes may be the best hope for keeping organizations healthy.
Risk management predicated on a mix of standardized risk tracking and cultural norms falls short. The only way for risky behavior to create value is if it is logically and precisely directed.
The University of California has a unique risk management strategy: The Chief Risk Officer gives employees organization wide the tools to manage their own risks. Over the last six years, the program has saved the university more than $500 million.
Is your firm making data-driven decisions? Or is it following the herd and overestimating or underestimating the risks associated with investments, product releases or customer needs? Read this post about the dangers of ‘availability bias.’
Firms with an approach that aligns with the real-world will create growth, while firms with a misaligned approach will shrink relative to each other. The risk attitude that aligns well will eventually control more of the market’s resources. Read this Harvard Business Review opinion on how risk attidude – and appetite – affects your firm.
The recent disclosure of a multibillion-dollar trading loss at JPMorgan Chase reminds us again of the challenge and complexity of risk management and who is ultimately responsible.
When organizations and systems appear to be performing well, when problems develop slowly over time, and when a variety of systematic lapses occur, even the best and the brightest simply do not notice gaps in information that would indicate a looming crisis.
Everyday, companies cede hard evidence to the political agendas of a willful manager or department. Savvy managers understand that weaving data-driven decisions into the fabric of corporate governance can obviate organizational infighting and drive progress.