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Hbr's 10 Must Reads on Managing Risk
Is your business playing it safe - or taking the right risks?
Risk is a regular part of business, but knowing which risks to take and when to step back is often unclear. Whether you're assessing a new opportunity for innovation or thinking about your long-term strategy in an unsteady economy, you need to know the best way to proceed while ensuring that your company is financially secure and thriving.
We've combed through hundreds of 'Harvard Business Review' articles and selected the 10 most important ones to help you determine which risks are worth taking and mitigate those your company - and your industry at large - are already facing.
This (audio)book will inspire you to: understand the three categories of risk and tailor your risk-management processes accordingly; gain experience through small strategic bets before launching larger initiatives; embrace uncertainty as a key element of breakthrough innovation; find opportunities in emerging markets - and avoid those you can't practically serve; get ahead of and minimize political risk; and avoid common mistakes when confronting risk.
Kindle & Paperback Editions ⇒ 208 pages
*PLEASE NOTE*:
If purchasing this title in Audible format, the accompanying PDF will be available in your Audible Library along with the audio.
RUNNING TIME ⇒ 5hrs. and 55mins.
©2020 Harvard Business Publishing Corporation (P)2020 Gildan Media
Risk is a regular part of business, but knowing which risks to take and when to step back is often unclear. Whether you're assessing a new opportunity for innovation or thinking about your long-term strategy in an unsteady economy, you need to know the best way to proceed while ensuring that your company is financially secure and thriving.
We've combed through hundreds of 'Harvard Business Review' articles and selected the 10 most important ones to help you determine which risks are worth taking and mitigate those your company - and your industry at large - are already facing.
This (audio)book will inspire you to: understand the three categories of risk and tailor your risk-management processes accordingly; gain experience through small strategic bets before launching larger initiatives; embrace uncertainty as a key element of breakthrough innovation; find opportunities in emerging markets - and avoid those you can't practically serve; get ahead of and minimize political risk; and avoid common mistakes when confronting risk.
Kindle & Paperback Editions ⇒ 208 pages
*PLEASE NOTE*:
If purchasing this title in Audible format, the accompanying PDF will be available in your Audible Library along with the audio.
RUNNING TIME ⇒ 5hrs. and 55mins.
©2020 Harvard Business Publishing Corporation (P)2020 Gildan Media
Audio CD
First published May 26, 2020
33 people are currently reading
168 people want to read
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Displaying 1 - 10 of 10 reviews
March 13, 2023
types of risks
internal risks which could be avoided
strategic risks
external risks
internal risks are due to employee behaviours,... could be mitigated by setting clear company values and boundaries like ten commandments of what not to do
external risks are due to environmental (earth quake , catastrophes), political(policy changes) , technology changes (new innovation making existing ones redundant)
external risks couldn't be anticipated in advance , so its always a good idea to stress test for long tails and black swans to check your org preparedness for the same
risk management teams should be localized and centralised , as local risk expert would be integrated into functional team providing feedback to central teams
whereas central risk management team should have direct communication channel to top level management
as general management is about single point focus and success whereas risk management is about diversification and considering other possibilities
to avoid cognitive biases risk management should be taken seriously with other team not just as a compliance obligation , risk experts should always play a
devils advocate role
business model innovation :
reduce your risk exposure by identifying assessing and evaluating your process with respect to value alongside the risk
outsource the parts of process with less value and more risk , only foucs on more value
efficient resource utilisation, price sensitive , optimized supply chain management
zipcar , charges based on hourly more resource utilization
blockbuster : reduces cost of inventory and profit sharing with production houses as there will be many duds alongside big hits
on other side of above examples
zara , dell : made cycle small as they saw more value in faster production and delivery though conventional theory says to out source production
they retained it as they are bringing value in other forms
furniture company like ikea has made designs available in their website allowed customers to vote and had only few models in the catalog based upon feedback
and they kept everything online to reduce inventory and supply chain logistics to retain competitive pricing
others have added risk as value by taking more of it like rollce royce by introduction of service model for airlines
black swan : low probability and high impact events
people underestimate likelihood of such events and try to predict long tails which is impossible to predict all possible events
hindsight != foresight
instead of trying predict possible long tails we should try to mitigate consequences or being prepared for consequences like hedging risk , taking insurance
standard deviation is not right approach
framing errors , 2 same mathematical equations will be interpreted in different way (psychology ) based on which people take decision
capitalism talks about overspecialization and division of labour ,,..we should be taking evolution and being prepared for lil redundancy to reduce risk exposure
ex: take Ricardo theory and apply to countries with changes in technology or exploration of new sources some big forces of labour could become obsolete ex: wine farmers in north american countries are extinct
supply chain management stress test and risk evaluation
stress test to invalidate some inherent assumptions and likely hood of its effects
RI (Risk index) , delay to market
strategic choices may not be always right way to check risk exposure
ex: invaluable issue with a valve supplier has costed ford a lot in delay in production lines , instead of anticipating it being prepared with stress tests and additional stock is a better approach
we cant anticipate hurricane Katrina
super forecasting :
intelligent analysts outperform experts
team is always better than individuals
internal risks which could be avoided
strategic risks
external risks
internal risks are due to employee behaviours,... could be mitigated by setting clear company values and boundaries like ten commandments of what not to do
external risks are due to environmental (earth quake , catastrophes), political(policy changes) , technology changes (new innovation making existing ones redundant)
external risks couldn't be anticipated in advance , so its always a good idea to stress test for long tails and black swans to check your org preparedness for the same
risk management teams should be localized and centralised , as local risk expert would be integrated into functional team providing feedback to central teams
whereas central risk management team should have direct communication channel to top level management
as general management is about single point focus and success whereas risk management is about diversification and considering other possibilities
to avoid cognitive biases risk management should be taken seriously with other team not just as a compliance obligation , risk experts should always play a
devils advocate role
business model innovation :
reduce your risk exposure by identifying assessing and evaluating your process with respect to value alongside the risk
outsource the parts of process with less value and more risk , only foucs on more value
efficient resource utilisation, price sensitive , optimized supply chain management
zipcar , charges based on hourly more resource utilization
blockbuster : reduces cost of inventory and profit sharing with production houses as there will be many duds alongside big hits
on other side of above examples
zara , dell : made cycle small as they saw more value in faster production and delivery though conventional theory says to out source production
they retained it as they are bringing value in other forms
furniture company like ikea has made designs available in their website allowed customers to vote and had only few models in the catalog based upon feedback
and they kept everything online to reduce inventory and supply chain logistics to retain competitive pricing
others have added risk as value by taking more of it like rollce royce by introduction of service model for airlines
black swan : low probability and high impact events
people underestimate likelihood of such events and try to predict long tails which is impossible to predict all possible events
hindsight != foresight
instead of trying predict possible long tails we should try to mitigate consequences or being prepared for consequences like hedging risk , taking insurance
standard deviation is not right approach
framing errors , 2 same mathematical equations will be interpreted in different way (psychology ) based on which people take decision
capitalism talks about overspecialization and division of labour ,,..we should be taking evolution and being prepared for lil redundancy to reduce risk exposure
ex: take Ricardo theory and apply to countries with changes in technology or exploration of new sources some big forces of labour could become obsolete ex: wine farmers in north american countries are extinct
supply chain management stress test and risk evaluation
stress test to invalidate some inherent assumptions and likely hood of its effects
RI (Risk index) , delay to market
strategic choices may not be always right way to check risk exposure
ex: invaluable issue with a valve supplier has costed ford a lot in delay in production lines , instead of anticipating it being prepared with stress tests and additional stock is a better approach
we cant anticipate hurricane Katrina
super forecasting :
intelligent analysts outperform experts
team is always better than individuals
August 26, 2023
Why Risk Is Hard to Talk About?
Multiple studies have found that people overestimate their ability to influence events that, in fact, are heavily determined by chance.
We tend to be overconfident about the accuracy of our forecasts and risk assessments and far too narrow in our assessment of the range of outcomes that may occur.
We also anchor our estimates to readily available evidence despite the known danger of making linear extrapolations from recent history to a highly uncertain and variable future.
We often compound this problem with a confirmation bias, which drives us to favor information that supports our positions (typically successes) and suppress information that contradicts them (typically failures).
—-
Risk management, we believe, should be about lessening the impact of what we don't understand- not a futile attempt to develop sophisticated techniques and stories that perpetuate our illusions of being able to understand and predict the social and economic environment.
Instead of trying to anticipate low-probability, high-impact events, we should reduce our vulnerability to them.
Risk managers should avoid using methods and measures connected to standard deviation, such as regression models, R-squares, and betas.
In any case, anyone looking for a single number to represent risk is inviting disaster.
Multiple studies have found that people overestimate their ability to influence events that, in fact, are heavily determined by chance.
We tend to be overconfident about the accuracy of our forecasts and risk assessments and far too narrow in our assessment of the range of outcomes that may occur.
We also anchor our estimates to readily available evidence despite the known danger of making linear extrapolations from recent history to a highly uncertain and variable future.
We often compound this problem with a confirmation bias, which drives us to favor information that supports our positions (typically successes) and suppress information that contradicts them (typically failures).
—-
Risk management, we believe, should be about lessening the impact of what we don't understand- not a futile attempt to develop sophisticated techniques and stories that perpetuate our illusions of being able to understand and predict the social and economic environment.
Instead of trying to anticipate low-probability, high-impact events, we should reduce our vulnerability to them.
Risk managers should avoid using methods and measures connected to standard deviation, such as regression models, R-squares, and betas.
In any case, anyone looking for a single number to represent risk is inviting disaster.
May 12, 2020
This compilation of HBR articles is great during a time of crisis like we are encountering right now with covid-19. I had read a few of these articles before during my MBA, but enjoyed seeing what else I can take form them and apply to the workplace. These reads were very informative on how to mitigate different types of risks within the workplace. All employees, not just executives can benefit from this packet. The one article that did not see to fit with the rest of the packet regards specific climate change risk.
December 11, 2024
HBR 1 must reads are always good to capture big ideas about specific business topics. The spectrum of risk management is large and this book covers multiple angles. Some catch my interest more than others. In comparison with other HBR this one is very eclectic so it was a bit hard to keep the red line.
July 22, 2021
I picked this from a local library and must admit that I was quite impressed from the very first article compiled. The excitement didn’t drop till the last page. I am seriously considering to purchase this book as a regular refresher material.
Must read for all who are inspired in managing risks.
Must read for all who are inspired in managing risks.
October 29, 2021
Articles are good but as title says these are just articles. Ideas are not so fresh, examples are interesting. Good introduction to the matter with plenty of perspectives, politics, cyber risks, ventures, …
May 29, 2022
Quick easy read…
December 30, 2022
Quick read, definitely insightful. I liked that so many different risk topics were discussed, however I was missing the red line a bit.
November 29, 2024
Managing Ridk
Managing risk has become top of agenda for many organisations as developments in technology and ever-changing economic landscape results in new and evolving risks.
Managing risk has become top of agenda for many organisations as developments in technology and ever-changing economic landscape results in new and evolving risks.
May 26, 2020
This is a great selection of articles from Harvard Business Review on Managing Risk. Executives as well as those in risk management role will benefit from the ideas provided in these articles.
I certainly like the article written by Condoleezza Rice and Amy Zegart about managing the political risk.
I certainly like the article written by Condoleezza Rice and Amy Zegart about managing the political risk.
Displaying 1 - 10 of 10 reviews