Why would risk-averse individuals or entities ever expose themselves intentionally to risk and increase their exposure over time?

The quickest answer is VALUE CREATION

As individuals or entities, we must deal with risk that gives us an advantage in achieving a success over the competitions. It is true that risk exposes us to potential losses but risk also provides us with opportunities. Given an example of how Google could exploit the opportunity of the advertisement charge on the web. Google using different approach on calculating the advertisement charge based on actual number of site visit rather than using common business practice based on total traffic. The differences resulted in financial success.

Are we willing to take that opportunity?

As a strategist, we should assure our capability in mapping out the actionable plan in response to risks in all phase. Otherwise, we will only be a follower or even worse it could turn our life into catastrophic.

Managing risk should be done in align with Strategic Planning or Execution since we must assure that we are going to exploit the opportunity not only managing or avoiding the risks. 5 critical capabilities that we must be ready to win the market or the competitors who are also exposed to same risk are:

1. having timely and reliable information to mapping out the action plan in response to risk

2. Using right speed of the response to risks

3. Learning from past experience and knowledge on the response to risks

4. Having adequate resources on capital, technology, personnel in response to risk

5. Having a flexibility on operating, production, financial to build the action plan in response to risk

Last but not least, we must build a good risk-taking-organization and align with their strategy to win the market.

[slideshare id=3879199&doc=theedgeofopportunityorcatastrophicstrategicriskseries-100427222732-phpapp02]

A New Horizon in Managing Risks

What is the mean of Risk Management Standard to your organization?

In the rising concern of Risk Management today, we have numbers of Risk Management implementation frameworks established by various nationwide bodies. Without one worldwide consensus on standard of Risk Management Implementation, the situation may lead us to various challenging and debating perspectives in deciding the most proper Risk Management implementation standard for our organization. Besides that, International Standard can also help an organization to comply with legal and regulatory requirements and international norms as well. Risk Management standard indeed contribute to the bottom line of organization but Risk Management standard provide only general description of the elements, processes, and activities required for risk management.

ISO 31000 provides a high level concept of Risk Management implementation that should not be in conflict with the existing and specific frameworks or methods of Risk Management implementation. Existing frameworks or methods may be different particularly in that they may not have as broad a perspective as ISO 31000. The most important thing highlighted in ISO 31000 is corporate culture since risk management cannot be implemented as a template; it goes along with the company’s specific needs and circumstances among others: the industry where they do business, complexity, size, strategy, and governance of the company.

In that ISO 31000 Seminar held by APB Group-Indonesia on August 6th, all of us were encouraged to have a new horizon in managing risks, means that Standard is a good guidance in implementing risk management and standard contribute in increasing visibility of the balance between opportunities and risk but standard itself is not a one-size-fits-all solution.


ISO 31000 Risk Management Standard, Jakarta, 06 August 2008

ISO 31000 Risk Management Standard, Jakarta, 06 August 2008