Counter strategic risk with pattern thinking.
Directors & Boards › Vol. 23 Nbr. 4, June 1999
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Summary
Corporate governance
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Counter strategic risk with pattern thinking.
Because the game of business is becoming more like speed chess, corporate directors who actively instill pattern thinking throughout the management team can help prevent shareholder value from stagnating or collapsing.
COMPANIES FACE different types of risk, and many products have been developed to help hedge or insure against currency, property/casualty, liability, and other risks. A relatively new type of risk -- strategic risk -- is becoming increasingly important for the corporation, yet it must be borne directly by shareholders, management, and the board of directors. Strategic risk is concerned with one overriding question: Can the firm's business design deliver sustained, above-average growth in shareholder value? This question is equally relevant to established companies, with historically successful business models, as it is to start-ups that are making bets on new ones. When investors spot strategic risks that threaten a company's health, they react swiftly and decisively -- at times with devastating results. A recent study by Mercer Management Consulting found that 10% of Fortune 10...See the full content of this document
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