Strategy can be the determinant of success, while the lack of strategy may spell ultimate failure. In an article for Risk Management magazine, Russ Banham explores strategic risks and how to avoid them through successful examples at four different organizations.
Tracking a Spectrum of Risks
Banham finds that “strategic risks are extremely difficult to evaluate, quantify and manage.” The predominant factors that affect a failed strategy are things like financial risks, macroeconomic risks, or even competitors. The good news is that organizations can combat these problems with risk management. Allowing a risk manager to help make decisions early can increase the chances for long-term success.
Rob Gould helped to establish an enterprise risk management (ERM) structure at Harley-Davidson. Utilizing a system for evaluating risk implications helps leaders to better plan for risks in the future. Gould and his team help to pinpoint key strategic risks. These risks are then further monitored by business leaders. Gould believes that businesses thrive with “opportunistic risks,” but only if they are understood, monitored, and managed.
Raphael Castillo implemented an ERM program at Molson Coors Brewing Company. This program has helped keep his company thinking through risk implications. Specifically, for him his challenges include taxation and internal regulation. These potential changes are risks that are shared with the company and managed through a team effort.
For Jim Presmanes and Haverty Furniture Companies, the ERM program needed to help them anticipate economic risks. After the recession greatly impacted furniture sales, businesses realized that it is vital to track the economy to better anticipate such a drastic turn in sales. Presmanes sought to develop a system that better evaluated the relationship between his company and the economy. He ultimately analyzed 30 different economic variables to determine which had the greatest affect.
Michael Liebowitz built an ERM framework that helped change the way New York University operates. The ERM helps leaders to better anticipate risks in the future that they may not have seen. This has also been applied to the university’s travel software management tool to better encourage cross-cultural collaboration.
You can read the original article here: http://www.rmmagazine.com/2016/04/01/scanning-the-risk-horizon-industry-veterans-on-their-roles-in-strategic-planning/