Risk management is much wider than simple financial or operational risk. Concepts such as ’strategic risk management’, ‘integrated risk management’ and ‘enterprise risk management’ now describe the wider application of such thinking, tools and techniques.
There is a common view that strategic risk is about managing risk ’strategically’ rather than examining strategic risk as a category similar to operational, financial and other risk areas. This common view causes confusion and may be one of the reasons that strategic risk is not further researched or specifically managed.
As outlined in my previous strategic risk blogs, one of the reasons for a lack of research is that there is no commonly accepted standard definition of strategic risk.
Much of this is no doubt due to the complexity of the concept of strategic risk, which suggests that no single quantitative measure will prove satisfactory in all strategic situations. Those risks that can be precisely quantified receive most of the attention from academic researchers, as well as corporate risk managers, while ’soft risks’, however significant, often receive little notice (cf. PricewaterhouseCoopers 2005). In order to further the literature, the need for a common understanding on strategic risk must be developed.
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