Posts Tagged ‘risk management in business’

9780749471354In People Risk Management, Keith Blacker and Patrick McConnell provide insight and practical suggestions about how to manage people-related risks at large commercial firms. Due to their size and complexity, large companies are more prone to disastrous outcomes, such as those experienced by BP, Enron, and Lehman Brothers. The authors offer practical tools, real-world examples, and best-practice guidance about how to implement effective people risk management across an organization and thereby improve decision-making processes.

From bad business decisions to illegal activity, people risk — the risk that people will deviate from an organization’s rules and procedures in a way that damages profits and reputations — presents a growing threat to increasingly complex and global businesses. Leaders should be aware of the following aspects of people risk:

  • Individuals and groups make bad decisions when they fail to consider all of the facts. A bad decision can benefit a firm, and a good decision can be morally dubious.
  • Rather than using rational analyses to make decisions, people are subject to cognitive biases or blind spots, such as overconfidence or groupthink.
  • A company’s culture has a significant effect on people risk management. The culture is influenced from the top down.
  • A company can use a decision checklist as well as pre- and post-mortems to help improve decision-making throughout the organization.
  • Organizations should create personalized codes of conduct to help individuals take personal responsibility and improve decision-making processes.

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Even the OddsEven the Odds by Karen Firestone offers readers a persuasive assessment of risk and how to evaluate it, analyze it, and make sensible choices in business and in life. Firestone’s approach and corresponding examples illustrate different types of risk and how the risks were or could have been avoided by implementing her four tenets of risk taking. The book serves as a guide to understanding the broader implications of risk and how it guides decision making. The risk-assessment activities presented can help improve the odds of success whether a person is making an investment, changing careers, or simply deciding where to have dinner.

Risk is everywhere. While people’s definitions of or tolerance for risk vary, most can agree that assessing risk is essential to achieving an optimal outcome, whether it is in business or life. There are four tenets to sensible risk taking that, if implemented, can make decision making a more positive and successful endeavor:

1. Right size the risk. It is important to determine the actual scope of the risk at hand. People need to know how much is really at stake and how much potential reward or benefit may be incurred if the risk pays off.

2. Right time the risk. The timing of the risk can make all the difference. Sometimes the risk will change based on when the action takes place.

3. Rely on knowledge, skills, and experience. By sticking with what they know, people are able to even the odds. Going outside of their comfort zones can increase their risk of failure.

4. Maintain a healthy skepticism. Quite often, projections and forecasts are unrealistic and can bring a false sense of confidence. People who remain skeptical and do their own research reduce their risks.

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