Winning with Risk Management

This book develops the notion that companies can succeed on the basis of risk management, much as companies compete on efficiency, costs, labor, location, and other dimensions that provide advantages. The reality of risk and how it impacts companies is that it is definite, often catastrophic and looks like a shock to the firm. This is striking, as a difference between firms on risk management can be more definite and impactful than a difference in operating efficiencies, for example. Those successful with risk are more clearly identified and the spoils are more clearly and immediately claimed. Winning with risk management requires discipline and a commitment to using information in decisions. More specifically, it requires recognizing shocks in industries and when competitors are poorly prepared so that action can be taken. Winning with risk also requires protecting owned assets and guarding against threats and reputational risks. This book will examine how leading firms that compete on risk have successfully done so. Through select case studies, this book showcases best practices in making risk management a competitive advantage in an enterprise. The cases further suggest that the competitive advantage from risk management also has implication on the capital structure of firms and their organizational formation. The competitive use of risk is not simply based on a set of algorithms, but rather encompasses how the enterprise deals with uncertainty, how it gathers data and transforms such data into meaningful risk information. The use of risk information requires that organizations seek and examine disconfirming information and promote a culture for decision-making that is open to such disconfirming information. This book will also examine how organizations must develop, treat, and communicate risk information for the purposes of winning with risk management.