Book contents
- Frontmatter
- Contents
- List of abbreviations
- List of figures
- List of tables
- List of boxes
- Preface
- 1 The strategic nature of corporate risk management
- 2 Economic exposures in corporate risk management
- 3 Managing market-related business exposures
- 4 Extending the risk management perspective
- 5 Integrative risk management perspectives
- 6 Current risk management practice and the rise of ERM
- 7 Strategic risk analyses
- 8 Strategic risk management – amendments to the ERM framework
- 9 Strategic risk management
- 10 Postscriptum
- Appendices
- Appendix 1 A strategic responsiveness model
- Appendix 2 Determining the premium on a call option
- Appendix 3 Determining the value of a real option
- Index
- References
9 - Strategic risk management
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- List of abbreviations
- List of figures
- List of tables
- List of boxes
- Preface
- 1 The strategic nature of corporate risk management
- 2 Economic exposures in corporate risk management
- 3 Managing market-related business exposures
- 4 Extending the risk management perspective
- 5 Integrative risk management perspectives
- 6 Current risk management practice and the rise of ERM
- 7 Strategic risk analyses
- 8 Strategic risk management – amendments to the ERM framework
- 9 Strategic risk management
- 10 Postscriptum
- Appendices
- Appendix 1 A strategic responsiveness model
- Appendix 2 Determining the premium on a call option
- Appendix 3 Determining the value of a real option
- Index
- References
Summary
In the preceding chapters, we have looked into the many ways in which the corporation can manage the adverse economic influences caused by a variety of risk factors. These risks include environmental hazards and market volatilities that can be recorded and thereby have a basis for quantification and instrumentation to diversify and hedge exposures. They comprise operational disruptions from irregular internal processes, errors, fraud, etc. where exact exposures are difficult to determine and are often managed by imposing exposure limits and internal controls. They also count various strategic risks that not only may be hard to quantify, but also difficult to foresee and thus require firm-specific response capabilities to observe subtle environmental changes and enable the organization to reconfigure and adapt. The effective handling of such diverse, complex and partially interacting risks must include a combination of different risk management approaches rather than adopting a single unified enterprise-wide framework.
Drawing on the previous discussions, it seems clear that effective risk management requires an amalgam of centralized risk monitoring and coordinating processes supported by specialized risk functions in combination with a general ability to respond decentrally where new risk events arise. In the following, we will discuss further how these integrated risk management processes may be organized and how they can accomplish the commonly stated purpose in risk management of avoiding downside losses and at the same time exploiting upside potentials.
- Type
- Chapter
- Information
- Strategic Risk Management PracticeHow to Deal Effectively with Major Corporate Exposures, pp. 200 - 224Publisher: Cambridge University PressPrint publication year: 2010