Risk Management Approaches

Abstract

This chapter introduces the types of risk management approaches used to handle risks arising with increased complexity.

The specific skills introduced are: (1) sharpening the ability to co-sense key risks and “presence” the future as it emerges; (2) co-creating strategies and actions that serve as a prototype for handling emerging challenges; and (3) setting priorities.

The learner is introduced to complexity reasoning, which involves identifying barriers or constraints, deciding where to enact barriers to prevent certain outcomes from materializing, and how to define and select payoffs from a suite of strategies. A case study from the evolution of brands in the beer industry is used to draw out the main lessons for leadership. Other cases used are from the construction industry and policies surrounding maintenance of infrastructure. The cases involve a varied set of actors as well as their definition of risk and appetite for risk. Tools that are helpful for decision-making are also introduced, including the value of risk-appetite statements. The role of scenario generation and analysis is critical, and the chapter revisits the concepts introduced in earlier chapters to help the learner bring all the learning together in a practical way.