Publisher's Synopsis
In today's post-crisis economy effective risk management is a critical component of any winning management strategy. It is important to emphasize that 'risk is not just bad things happening, but also good things not happening' - a clarification that is particularly crucial in risk analysis of social systems. Many companies do not fail from primarily taking 'wrong actions', but from not capitalizing on their opportunities, i.e., the loss of an opportunity. The effective business focuses on opportunities rather than problems'. Risk management is ultimately about being proactive. The uncertain economic times of the past few years have had a major effect on how companies operate these days. Companies that used to operate smoothly with the help of forecasts and projections now refrain from making business judgment that are set in stone. Risk is the main cause of uncertainty in any organization. Thus, companies increasingly focus more on identifying risks and managing them before they even affect the business. The ability to manage risk will help companies act more confidently on future business decisions. Their knowledge of the risks they are facing will give them various options on how to deal with potential problems. Risk can come from both internal and external sources. The external risks are those that are not in direct control of the management. These include political issues, exchange rates, interest rates, and so on. Internal risks, on the other hand, include non-compliance or information breaches, among several others. Risk management is important in an organization because without it, a firm cannot possibly define its objectives for the future. If a company defines objectives without taking the risks into consideration, chances are that they will lose direction once any of these risks hit home. In recent years, organizations have added risk management departments to their team. The role of this team is to identify risks, come up with strategies to guard against these risks, to execute these strategies, and to motivate all members of the company to cooperate in these strategies. Larger organizations generally face more risks, so their risk management strategies also need to be more sophisticated. Also, the risk management team is responsible for assessing each risk and deter- mining which of them are critical for the business. The critical risks are those that could have an adverse impact on the business; these should then be given importance and should be prioritized. The whole goal of risk management is to make sure that the company only takes the risks that will help it achieve its primary objectives while keeping all other risks under control. This Encyclopaedia of Risk Management for the Future: Theory and Cases focuses on reducing these limitations and improve the quality of risk management. However, it is unlikely that any approach can be developed that is 100% consistent, free of deception and without the risk of reaching different conclusions. In today's post-crisis economy effective risk management is a critical component of any winning management strategy. It is important to emphasize that 'risk is not just bad things happening, but also good things not happening' - a clarification that is particularly crucial in risk analysis of social systems. Many companies do not fail from primarily taking 'wrong actions', but from not capitalizing on their opportunities, i.e., the loss of an opportunity. The effective business focuses on opportunities rather than problems'. Risk management is ultimately about being proactive. The uncertain economic times of the past few years have had a major effect on how companies operate these days. Companies that used to operate smoothly with the help of forecasts and projections now refrain from making business judgment that are set in stone. Risk is the main cause of uncertainty in any organization. Thus, companies increasingly focus more on identifying risks and managing them before they even affect the business. The ability to manage risk will help companies act more confidently on future business decisions. Their knowledge of the risks they are facing will give them various options on how to deal with potential problems. Risk can come from both internal and external sources. The external risks are those that are not in direct control of the management. These include political issues, exchange rates, interest rates, and so on. Internal risks, on the other hand, include non-compliance or information breaches, among several others. Risk management is important in an organization because without it, a firm cannot possibly define its objectives for the future. If a company defines objectives without taking the risks into consideration, chances are that they will lose direction once any of these risks hit home. In recent years, organizations have added risk management departments to their team. The role of this team is to identify risks, come up with strategies to guard against these risks, to execute these strategies, and to motivate all members of the company to cooperate in these strategies. Larger organizations generally face more risks, so their risk management strategies also need to be more sophisticated. Also, the risk management team is responsible for assessing each risk and deter- mining which of them are critical for the business. The critical risks are those that could have an adverse impact on the business; these should then be given importance and should be prioritized. The whole goal of risk management is to make sure that the company only takes the risks that will help it achieve its primary objectives while keeping all other risks under control. This Encyclopaedia of Risk Management for the Future: Theory and Cases focuses on reducing these limitations and improve the quality of risk management. However, it is unlikely that any approach can be developed that is 100% consistent, free of deception and without the risk of reaching different conclusions.