| Providing strategic direction for a business means understanding what drives the creation of value and what destroys it. This in turn means the pursuit of opportunities must entail comprehension of the risks to take and the risks to avoid. Hence to grow any business entails risk judgement and risk acceptance. A business’s ability to prosper in the face of risk, at the same time as responding to unplanned events, good or bad, is a prime indicator of its ability to compete. However, risk exposure is becoming greater, more complex, diverse and dynamic. This has arisen in no small part from rapid changes in technology, speed of communication, globalisation of business and the rate of change within markets. Businesses now operate in an entirely different environment compared with just 10 years ago. The source of risk can also come from within, as businesses strive for growth. The adoption of expansion strategies, such as acquisition, investment in emerging markets, major organisational restructuring, outsourcing key processes, major capital investment projects and developing significant new products, can all increase a business’s risk exposure.Arecent reviewof risk management practices in 14 large global corporations revealed that by the end of the 1990s, the range of risks that companies felt they needed to manage had vastly expanded, and was continuing to grow in number (Hunt 2001). |
