Strategic Risk Management Practice

Abstract

At a time when corporate scandals and major financial failures dominate newspaper headlines, the importance of good risk management practices has never been more obvious. The absence or mismanagement of such practices can have devastating effects on exposed organizations and the wider economy (Barings Bank, Enron, Lehmann Brothers, Northern Rock, to name but a few). Today's organizations and corporate leaders must learn the lessons of such failures by developing practices to deal effectively with risk. This book is an important step towards this end. Written from a European perspective, it brings together ideas, concepts and practices developed in various risk markets and academic fields to provide a much-needed overview of different approaches to risk management. It critiques prevailing enterprise risk management frameworks (ERMs) and proposes a suitable alternative. Combining academic rigour and practical experience, this is an important resource for graduate students and professionals concerned with strategic risk management.

Performative and political: Corporate constructions of climate change risk

“…Organizations are perceived to be exposed to a variety of risks as objective facts that need to be 'managed' through rational decision making, employing, for example, cost-benefit analysis based on probabilities and consequences (Andersen and Schrøder, 2010;Randall, 2011). The core assumption underlying risk management is that risk is 'out there' and it just has to be 'found' and 'captured' by professional experts using statistical tools and analysis.…”

Strategic Options to Cultural Risk Management: A Theoretical Framework

“…In recent years, public concern about the risks faced by many firms has increased (Andersen and Schroder, 2010 [2]). This concern can be explained by added uncertainty in the organizational environment due to higher frequency of major risk events over the past decade, such as terrorism, political unrest, energy price shocks, large-scale involuntary migrations, or natural disasters.…”

“…Risk stems from every activity that a firm undertakes, including those directly related to the firm's international business activities (Fraser and Simkins, 2010 [34]). One of the primary objectives of firms operating internationally is to manage risk (Ghoshal, 1987 [39]), and an integrated risk management process should be regarded as a core skill by every firm (Miller, 1992 [79]; Bishop, 1996 [11]; Andersen and Schroder, 2010 [2]; Fraser and Simkins, 2010 [34]; Hopkin, 2012 [51]).…”

“…Events such as the Brexit vote (political and economic risk), the Fort McMurray wildfire (disaster risk), hacking and cyber-attacks (technology risk) or the Home Depot commercial failure in China (cultural risk) serve to highlight the fact that the scope of risks extends beyond credit and the market. While financial risks are well defined and accounted for in a company's records, many of the non-financial risks are less precise and, therefore, much harder to describe, predict, and measure (Andersen and Schroder, 2010 [2]).…”

Risk Management Standards in Global Markets

“…The mentioned approach is usually described as "integrated risk management" (IRM) and "enterprise risk management" (ERM) [5]. Academicians, public agencies, auditors and market regulators and supervisors have analyzed this approach [6] and recommended its adoption as a vehicle for better performances in organizations of any size and operating in any sector.…”