Risk management, thoughts and practices
Over the years, risk management has become one of the business concepts which have continually shaped management thoughts and practices. Naturally, risk affects the whole world no matter the level of connection; it is inherent in all spheres of individual contacts and enterprise operations. Today, the concept is highly regarded following its progressive elevation to the advanced priority pedestal as demonstrated by the vast resources committed and time allocated by entities in crafting new strategies to quell its impact. The general perception upholds that, the best catalyst to effectively managing risk is adopting a holistic approach inclusive of all anticipated risks, ranked based on their impact and respective likelihood of occurrence.
However, I assert that the risk exposures facing enterprises have become dynamic and complex both in size and scope for outmoded risk management models to appreciate them fully. Risks typically vary for each environment and from one organization to the next making it difficult to integrate management consideration in every aspect of running and managing the organization. The popular thinking now embraced by risk experts is that when organizations collapse, they do so owing to improper risk management practices in pursuit of improving the
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[...] Everything You Think You Know about Risk Seems Unhelpful and is Probably Wrong Introduction Over the years, risk management has become one of the business concepts which have continually shaped management thoughts and practices. Naturally, risk affects the whole world no matter the level of connection; it is inherent in all spheres of individual contacts and enterprise operations. Today, the concept is highly regarded following its progressive elevation to the advanced priority pedestal as demonstrated by the vast resources committed and time allocated by entities in crafting new strategies to quell its impact. [...]
[...] The absence of historical precedent from which statistical models can evaluate risk, expose organizations to the elements of subjectivity and mistaken assumptions. For example, after the demise of Lehman Brother in the fall of 2008 the financial sector continues to struggle with the reverberations of this crisis, whose resolution is not yet in sight following the amplification by the global recession10. In well-functioning systems, corporate risks are handled in decentralized silos where elements of known risks are segregated from the central monitoring of risk. [...]
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