Page 87 - Risk Management in current scenario

all the possible risk factors that may arise from different sources and
prepare an action plan for each risk if they arise.

Strategy failure rate
The integration of strategy and the risk management within the strategy
making, is yet to fully take shape in the current world. It has been argued
by many strategy makers that future uncertainties are hygiene factors that
are always taken into account while setting the strategy. This is a
challengeable statement as James Lam (the famous author of many risk
management books and first CRO of the World) points out that out of
all the failures in the world, strategic risk accounts for 70% of failures,
operational risk accounts for 20% of failure and financial risk accounts
for 10% of failure. Where is the problem, if strategy making and risk
management are integrated or part of a hygiene factor within the strategy
making? If key risks are identified and action plans are prepared, strategy
execution risks are substantially reduced.

Integration of risk management
The problem lies, in fully appreciating the risks; what does this mean while
setting the strategy? The problem lies in both fully scanning the horizon
for all possible risks identification at a time of strategy making as well as
preparing an action plan to treat risk. Just knowing the uncertain events
of the future is not enough; it does not provide protection if the event
happens.

Like a medical treatment for curing a disease is performed by undergoing
medical examinations, taking medicine and monitoring of the disease in
consultation with the doctor on a regular interval; similarly, risks once
identified during the strategy planning stage also require full treatment
of risks. All the risks identified during the strategy planning stage should
be quantified either qualitatively or quantitatively, the risks then need
to be prioritized based on the likelihood and impact on the organization
to take up appropriate treatment. The treatment of any risk has four

Risk Management in Current Scenario | 85