Risk Management

Introduction
Risk is part of doing business and needs to be managed as such.

Risk management is part of change management as all change involves risk.
Risk management is more than trying to minimise, mitigated or avoiding risk, as risk can provide opportunities to create value and give  you a competitive advantage.
"...risk can blossom into opportunity, and it's down to business leaders to strike a balance between risk and reward. Those who recognise which risks have the potential to generate profit and opportunities should anchor those risks into existing strategic planning process to ensure success. This determination to manage risk proactively won't just prevent them from happening again - or at least mitigate them - it will fosters a culture of informed risk-taking from the top down..."
Camms, 2023

Need to remember that not all risk will turn into opportunities; still need for proactive avoidance and mitigation of significant threats that could be detrimental to the business.
"...Both the challenge and opportunity is for them to recognise which risk offers the greatest potential to influence business outcomes and understand how to harness those risks to enhance performance, drive value creation and enable long-term viability. empowered by this ability pre-empt what could happen from a risk perspective - both good and bad - businesses will develop the agility and resilience needed to thrive..."
Camms, 2023

Some types of risk

- strategic (long-term risks that relate to strategic decisions or objectives; usually external and high risk)
- operational (short-term risks that relate to systems, processes, products, etc; usually internal and low-risk)
- financial (related to money)
- reputational (related to credibility)
- regulatory (related to legality)

Examples of strategic risks

"...- changes in senior management and leadership
     - introduction of new products or services
     - merger and acquisitions
     - market or industry changes, such as a shift in needs or expectations of customers
     - problems with suppliers and other stakeholders
     - failure to adapt to changing environment or keep up with competitors
     - company reputational damage
     - Black Swan events, such as Covid-19 pandemic..."
Camms, 2023

NB Many strategic risks can be linked to changes in technology, demographics, geopolitical events, environmental issues, etc.
"...These risks have the potential to compromise supply chains, facilities, technology, talent, capital, reputation, and the value creation..."
Camms, 2023

Need to be able to quantify, monitor and manage these risks by using technology for scanning the environment, tracking developments and visualising risk data. Some of the technology is related to real-time scanning, big data, text analytics, visualisation tools, triggered notifications, etc that can recognise emerging risks, monitor changes, trends, fads, etc are still in into actionable information.

Risk assessments should be part of strategic planning.

Some examples of strategic risk-taking enhancing businesses at various stages of their life cycle

- Dropbox (its inventor, Drew Houston, in 2007 was told by Steve Jobs (Apple) that he would put him out of business with Apples's iCloud; Houston stood his ground and in the 4th quarter of 2021 Dropbox generated total revenue of around $US 560 m.)

- Android (Google purchased this relatively unknown mobile in 2005 for an estimated $US 50 m.; this gave gave Google the mobile operating system (OS) required to compete with likes of Apple and Microsoft when the mobile market was booming; now Apple's
"...estimated share of the lucrative smart phone market is a whoppiing 85%..."
Camms, 2023

- Marcus (Goldman Sachs entered fintech, online, consumer banking market as a way to increase customers value from their products; it is regarded as a top performing financial products)