Risk management is frequently misunderstood, often seen as a necessary evil that hinders rather than helps business success. Mark Beasley, a professor and director of the enterprise risk management initiative at North Carolina State University, offers a fresh perspective on how to get executives to engage in these crucial conversations. Instead of presenting risk as an obstacle, Beasley suggests embedding it within strategic discussions by focusing on the assumptions that underlie those strategies.
Executives often make assumptions about the future without fully realizing it, and these assumptions can lead to significant risks if left unchecked. For example, many financial models prior to the 2008 crisis were built on the assumption that real estate prices would remain stable or rise. By recognizing such assumptions and monitoring them closely, businesses can better prepare for potential disruptions. This method not only integrates risk management into the strategic planning process but also avoids the negativity often associated with risk discussions.
Beasley refers to this approach as “stealth” risk management—an idea that shifts the focus from risk mitigation to risk awareness and management. Rather than framing the conversation around risks that could derail a strategy, the discussion revolves around how confident executives are in their assumptions and what the consequences could be if those assumptions prove wrong. This subtle shift in language can make executives more willing to engage in risk-related discussions.
Ultimately, the goal is to encourage a culture where risk management is not about avoiding risk but about managing it in a way that supports business success. By fostering a more open and organized conversation around risk within the context of strategic planning, companies can better navigate uncertainties and enhance their chances of achieving long-term success.
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