Embracing Risk
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Embracing Risk
…chaos brings opportunity
For those who are prepared…
RISK is simply an element of
effective strategy
Most people think of:
Rivalry Among Existing
Competitors
Threat of New
Entrants
Bargaining Power of Buyers
Threat of Substitutes
Bargaining Power of Suppliers
Do you have a clearly focused and well-communicated strategy for growth?
Effective Strategy =
Valued Differentiation x Execution
What strategy is not…• More, better, faster is not a strategy.• Effectiveness and efficiency are
necessary… but not sufficient.• Superb execution of fundamental
business processes… is expected.• Being extremely good at what you are
supposed to be good at… gets you no extra credit at all.
• The willingness… even enthusiasm… to change EVERYTHING combined with the wisdom to understand what must NEVER be changed.
The Key To Success in the New Normal…
•Nimbleosity•Nimbo-licious
Strategy is INTERNALas well as EXTERNAL
Five Foundations of Effective Strategic Thinking
Business Acumen
Personal Experience
Pattern Recognition
Strategic Insight
Disciplined Execution
The Four – I’s• Ignorance
• Inflexibility
• Indifference
• Inconsistency
How to avoid the Four I’s • Aggressive external market focus.
• Aggressive customer focus.
• Keep the “Main Things” the main things.
• Bullish on knowledge sharing and learning.
• Passion and commitment at all levels.
• Foster a healthy paranoia.
• Revel in change.
How do you decide which risks are worth embracing?
Quantitative & Qualitative
Take a Chance
Take A Pass
DelegateTake Your Time
HIGH
LOW
LOW HIGH
Probability
Impact
Quantitative Risk Assessment Protocol
a) Conduct a risk assessment and vulnerability study to determine the risk factors. (b) Based on the top 5 risk factors - determine the value of assets under risk. (c) Determine the historical attitude of the company @ risk exposure.(d) Estimate the Annualized Rate of Occurrence (ARO) for each risk factor. (e) Determine the countermeasures required to overcome each risk factor. (f) Determine the Annualized Loss Expectancy (ALE) for each risk factor. (g) Conduct the safeguard cost/benefit analysis by calculating the difference between the ALE prior to implementing the countermeasure to the ALE after implementing the countermeasures . (h) Based on the above analysis, determine the return on investment using Internal Rate of Return (IRR).
Litigation Risk Assessments
• Case Status – A short description of the current status of the proceedings, anticipated motions and discovery, and settlement discussions or their absence. This section also can address issues such as the existence of an arbitration agreement and insurance coverage.
• � Legal Analysis – An assessment of any significant legal issues, including the benefits and risks of obtaining a binding judicial precedent.
• � Strengths and Weaknesses – A succinct outline of the strengths and weaknesses of your factual and legal position, including such factors as the substance and impact of the evidence, the availability and quality of witnesses, the sympathy or not of the adversary, the friendliness or hostility of the tribunal, and the competence and experience of opposing counsel.
• Budget � – The anticipated legal budget. • � Possible Results and Probabilities – An assessment of damages, including possible
results, probabilities and discounted values, and anticipated litigation expenses. The case value assessment includes percentage estimates based on various potential outcomes. Although percentages may imply more precision than is justified, they convey information more clearly than imprecise adjectives frequently used in describing litigation risk.
Hazard Identification
Dose-Response Analysis
Exposer Quantification
SLOW DOWN!!!!!
Workshop
Scenario Planning
Begin with the end in mind
Assessing the Strategic SituationSimplicity Complexity
Certainty Uncertainty
Knowing Forecasting
Proactive Adaptive
Strategic Planning
Scenario Planning
Trigger Points
Embracing Risk = Change
Anyone who tells you they enjoy change… should seek
immediate professional help.
Emotional Response to Perceived Negative Change
Stability
Immobilization
Denial
Anger
Bargaining
Depression
Testing
Acceptance
TimePassive
Active
Emoti
onal
Res
pons
e
Managing Positive Responses to Change
Uninformed Optimism
Informed Pessimism
HopefulRealism
Informed Optimism
Completion
CheckingOut
TIME
PESS
IMIS
M
The eight major steps of the change process
Build the case for change
Create a strong sense of urgency
Form a powerful guiding
coalition
Create a clear vision for successful
change
Relentlessly communicate
the vision
Empower others to act
Plan for and create short-
term wins
Institutionalize new
approaches
Process
Build an irresistible case for change
Create a strong sense of urgency
Form a powerful guiding coalition
Create a clear vision for successful change and communicate it relentlessly
Empower others to act
Plan for and celebrate small wins
Institutionalize the change
Four antidotes to change resistance1. Bring people face-to-face with the external pressures to change.
2. Engage change “zealots.”
3. Manage feelings & emotions.
4. Support the change with new tools, systems and training.
Embracing Risk = Change
Embracing Change = Fear
NOT Embracing Change = Failure
Workshop: What are THREE risks / changes we need to embrace as a community?
THANK YOUIf you have any questions at all please do not hesitate to send a note or call.
My email address is: [email protected]
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These slides and the workbook have already been uploaded to:
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