Real Options in Information Technology Risk Management: An Empirical Validation of Risk-Option Relationships

Benaroch, Michel; Lichtenstein, Yossi; Robinson, K.M.

doi:10.2307/25148756

Cited by 126 publications

(70 citation statements)

References 42 publications

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“…Activities that foster learning such as prototypes and pilots create real options and in doing so reduce risk and improve the value potential of the project or initiative. But, as Benaroch et al (2006) found in one organisation, managers follow the logic of option-based risk management, but only at an intuitive level.…”

Section: Lack Of Appreciation Of the Uncertainty Embedded In Estimatementioning

confidence: 99%

“…While the creation of real options is not excluded from conventional approaches to risk (threat and opportunity) management, and is increasingly discussed, it is not common practice, not mentioned in any of the mainstream guides and rarely considered systematically as a way of enhancing value (Benaroch et al 2006;Benaroch & Goldstein 2009). Pender (2001 argues that, "since uncertainty and risk in projects is predominantly caused by incomplete knowledge (as opposed to randomness), responding to risk must acknowledge the temporal dimension and embrace an options approach.…”

Section: Actions or Optionsmentioning

confidence: 99%

“…More complete treatments of real options in project contexts are provided elsewhere, e.g. Huchzermeier & Loch (2001), Kumar (2002), Benaroch et al (2006), Benaroch & Goldstein (2009).…”

Section: Actions or Optionsmentioning

confidence: 99%

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Risk management reconceived: reconciling economic rationality with behavioural tendencies

Murray‐Webster

Pellegrinelli

2010

PPPM

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Risk management practices as described in many leading texts feel counterintuitive to many practitioners and are frequently ignored, despite their being evidently logical and potentially valuable. Such practices are often conceived as a remedial post-planning, audit activity. This paper proposes an approach for dealing with project uncertainty and risk, grounded in economics and taking into account behavioural biases and heuristics. The proposed approach is argued to be an enhancement to conventional risk management practices and one that can serve organisations better while also aligning to experienced practitioners' intuitive approaches. In particular, we argue: that the focus should be on adding economic value rather than reducing risk per se; that opportunity gain/loss is a superior metric for gauging potential impacts of risky events; and that creation of real options should be emphasised as part of the repertoire of generic response actions to risk. The approach also supports the integration and handling of uncertainty and risk as part of holistic project planning and control.

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Section: Lack Of Appreciation Of the Uncertainty Embedded In Estimatementioning

confidence: 99%

Section: Actions or Optionsmentioning

confidence: 99%

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Risk management reconceived: reconciling economic rationality with behavioural tendencies

Murray‐Webster

Pellegrinelli

2010

PPPM

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“…The options themselves are not traded but often emerge as exploitable potentials in the company's operation. The following listing presents a synthesis of the most frequently mentioned option types related to IT investments [40], [7]:…”

Section: Real Options In It Investmentsmentioning

confidence: 99%

“…The fact, that the real-option approach is part of the mainstream research in the field of IT risk management (see e.g. [7]) supports this reasoning too. Also the management's targeted search for and raising awareness of investment options is the first step towards capitalizing on these opportunities.…”

mentioning

confidence: 92%

How to Measure Business Value of Information Systems? Practical Implications of a Literature Review

Aranyossy¹

2014

International Journal of Advanced Research in Computer and Comm

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Abstract:In 2014 IT spending reaches 3,75 billion USD according to Gartner's forecast, while this years Standish Group report shows that 31% of projects will be cancelled before completion. These facts and the tightening of corporate budgets highlight the importance of IT valuation ex ante and ex post as well. This paper presents an overview of normative research on IT business valuation, while trying to stress practical conclusions supporting future management practice. Research suggests that the concurrent use of the discounted cash flow and real option methodologies can effectively support decisions as they can mutually offset each other's weaknesses, i.e. DCF's inflexibility and lack of strategic focus and ROA's complexity and lack of communicability. Also we conclude that the principal function of ex ante IT valuation lies not so much in determining an exact value as in identifying the key factors of value creation, thus support supporting management during implementation and use.

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Risk? Crisis? Emergency? Implications of the new climate emergency framing for governance and policy

McHugh

Lemos

Morrison

2021

WIREs Climate Change

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The term "climate emergency" represents a new phase in climate change framing that many hope will invigorate more climate action. Yet there has been relatively little discussion of how the new emergency framing might shape broader governance and policy. In this advanced review, we critically review and synthesize existing literature on crisis and emergency to inform our understanding of how this new shift might affect governance and policy. Specifically, we explore the literature on crisis governance and policy to argue that there is no simple answer to whether the "climate emergency" framing will be supportive of climate governance and policy; rather, more work needs to be done to understand how different political actors respond according to their perceptions, interests and values. To assist this endeavor, we develop a typology of four policy pathways, ranging from "no emergency," to "no emergency, but recognize risk," "emergency as a threat" and "emergency as an opportunity." We highlight the need to consider the effects of multiple and overlapping emergency frames, using the example of the intersection of climate change and COVID-19. Finally, we suggest new interdisciplinary research directions for critically analyzing and refining this new phase of climate change framing.

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Real Options in Information Technology Risk Management: An Empirical Validation of Risk-Option Relationships

Cited by 126 publications

References 42 publications

Risk management reconceived: reconciling economic rationality with behavioural tendencies

Risk management reconceived: reconciling economic rationality with behavioural tendencies

How to Measure Business Value of Information Systems? Practical Implications of a Literature Review

Risk? Crisis? Emergency? Implications of the new climate emergency framing for governance and policy

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