Recession-Proof Risk Management Strategies: A Primer for Business

Recession-Proof Risk Management Strategies: A Primer for Business

and Industry

As the global economy slowly slides into recession, organizations face new challenges and opportunities. In today's interconnected world, it's impractical for companies to suspend their innovation initiatives until the worst of the storm blows over. To do so is to risk being well behind the curve when the economy does recover, and losing precious ground to competitors who found creative ways to keep their innovation initiatives moving during the darkest days of the downturn.

As part of this study, Chuck Frey of Innovation Tools and Renee Hopkins Callahan of Innosight recently contacted a diverse collection of innovation experts and practitioners to learn more about the strategies they recommend for maintaining innovation during these challenging times. Respondents include some of the best and brightest innovation authors, bloggers, consultants, and practitioners. In addition, this report includes links to more than 60 examples of recent coverage of this topic in online media and the blogosphere.

This collection of resources represents a practical roadmap that your firm can use to help identify opportunities for adapting your innovation initiatives to the current economic downturn. Use this roadmap to help to position your firm to take full advantage of the upturn when it inevitably comes.

Assume that you took your family on vacation somewhere distant and failed to study the type of weather you would encounter. You might pack for sun, and it turns out to be cold. You might pack for outdoor activities and have to spend the entire vacation inside. This is what your risk management program is about: matching your plans with the existing environment.

A global firm-wide risk management program consists of three prongs or strategies:

1. Identification of the specific risks. In this strategy, you identify and assess risks, measure them, and then use this information to prioritize and strategize each identified risk.
2. Arrive at specific ways of dealing with the risk (specifically, controlling, mitigating,

or avoiding).

1. Monitor the risk. This is the most neglected strategy of the three because we have to slice

and dice each identified risk in three different ways. We look at the potential risk at the macro level to determine its affect on the culture, at the individual level to see how employees view and handle the risk at the process level, and, finally, at the activity level where the actual decision takes place.

The following chart illustrates this three-pronged approach.

Three specific global risks reside:

1. Strategic risk

2. Operational risk

3. Innovation risk

101/2 Rules for Successful Business Risk Taking

1. Focus on trouble, and you will get trouble. Focus on success, and you will get success.
2. Trust that your people know what a risk is.
3. Recognize that your people may not know how to recover from the negative effects of a risk.
4. Know that no risk is worth undertaking when proper planning or analyzing cannot be completed beforehand.
5. Know that no risk is worth undertaking when a “lessons learned” cannot be completed afterward.
6. Recognize that every plan of action and strategy must have a feedback instrument built into it.
7. Understand the costs of your risk tolerance and your risk avoidance.
8. Know that no one is exempt from making errors in judgment.
9. Tell the truth about the risk and its implications. Accept the truth about the risk and its implications.
10. Be willing to live with the negative results of each risk undertaken.

10.1/2.Want more rewards? Take more risks! Want more success? Reward risk taking!