Strategic Risk Management in the Boardroom Is Vital in an Age of Uncertainty
Risk management is a matter of major interest to a board of directors. Why, then, do so few seem to realize their responsibility? Here, we look at how business—and risk along with it—evolved. We also define domains of control that should interest corporate boards in every business. While most risk management theories focus on domains of practice, we will look at how risk interacts with corporate governance, and finish by examining domain-specific types of risks and how corporations often react to them within each of the control domains. All of this is meant to show why strategic risk is of the utmost importance to corporate governance and, by extension, to the chairman and board of directors. Strategic risk management is a consideration belonging in any collection of organizational process assets!
Evolution of Business and Strategic Risk
Business derives from a simple fact: No single human possesses every item, skill, or resource required to ensure their survival. Humans engage in commerce (aka “business”) based on analysis of the possible benefit relative to potential cost; primarily considering whether it improves their survivability, and secondarily, whether it improves the quality of life they’ll survive to enjoy. The analysis may be carried out either consciously or subconsciously using a classic strategic model:
Please log in or sign up below to read the rest of the article.