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Surviving and Thriving in Uncertainty: Creating The Risk Intelligent Enterprise

ISBN: 978-0-470-24788-4
368 pages
April 2010
Surviving and Thriving in Uncertainty: Creating The Risk Intelligent Enterprise  (0470247886) cover image
A new book to help senior executives and boards get smart about risk management

The ability of businesses to survive and thrive often requires unconventional thinking and calculated risk taking. The key is to make the right decisions—even under the most risky, uncertain, and turbulent conditions.

In the new book, Surviving and Thriving in Uncertainty: Creating the Risk Intelligent Enterprise, authors Rick Funston and Steve Wagner suggest that effective risk taking is needed in order to innovate, stay competitive, and drive value creation.

Based on their combined decades of experience as practitioners, consultants, and advisors to numerous business professionals throughout the world, Funston and Wagner discuss the adoption of 10 essential and practical skills, which will improve agility, resilience, and realize benefits:

  • Challenging basic business assumptions can help identify "Black Swans" and provide first-mover advantage

  • Defining the corporate risk appetite and risk tolerances can help reduce

  • the risk of ruin. 
  • Anticipating potential causes of failure can improve chances of survival and success through improved preparedness. 
  • Factoring in velocity and momentum can improve speed of response and recovery. 
  • Verifying sources and the reliability of information can improve insights for decision making and thus decision quality. 
  • Taking a longer-term perspective can aid in identifying the potential unintended consequences of short-term decisions.
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Acknowledgments.

Foreword.

Preface.

Introduction.

Conventional Risk Management.

A Risk Intelligent Approach.

The Approach of This Book.

The Structure of This Book.

PART I WHEN RISKS BECOME BRUTAL REALITIES.

CHAPTER 1 To Survive and Thrive: A Matter of Judgment.

The Revolving Door to the Corner Office.

Barriers to Board Effectiveness.

The Imperatives of the Enterprise.

CHAPTER 2 Conventional Risk Management Has Failed.

What Goes Up Must Come Down.

The Evolution of Finance, Market, and Risk Management Theory.

Taking a (Random) Walk.

CHAPTER 3 An Unconventional Approach to Risk Management.

Calculated Risk Taking Creates Value.

Calculated Risk Taking and Risk Aversion.

Risk Intelligence: An Unconventional Approach.

PART II TEN ESSENTIAL RISK INTELLIGENCE SKILLS.

CHAPTER 4 Check Your Assumptions at the Door.

Fatal Flaw #1: Failing to Challenge Your Assumptions.

Risk Intelligence Skill #1: Check Your Assumptions at the Door.

CHAPTER 5 Maintain Constant Vigilance.

Fatal Flaw #2: Lack of Vigilance.

Risk Intelligence Skill #2: Maintain Constant Vigilance.

CHAPTER 6 Factor in Velocity and Momentum.

Fatal Flaw # 3: Failure to Consider Velocity and Momentum.

Risk Intelligence Skill #3: Factor in Velocity and Momentum.

CHAPTER 7 Manage the Key Connections.

Fatal Flaw #4: Failure to Make Key Connections and Manage Complexity.

Risk Intelligence Skill #4: Manage Your Key Connections.

CHAPTER 8 Anticipate Causes of Failure.

Fatal Flaw #5: Failure to Anticipate Failure.

Risk Intelligence Skill #5: Anticipate Causes of Failure.

CHAPTER 9 Verify Sources and Corroborate Information.

Fatal Flaw #6: Failure to Verify Sources and Corroborate Information.

Risk Intelligence Skill # 6: Verify Sources and Corroborate Information.

CHAPTER 10 Maintain a Margin of Safety.

Fatal Flaw #7: Failing to Maintain a Margin of Safety.

Risk Intelligence Skill #7: Maintain a Margin of Safety.

CHAPTER 11 Set Your Enterprise Time Horizons.

Fatal Flaw #8: Short-Termism.

Risk Intelligence Skill #8: Set Your Enterprise Time Horizons.

CHAPTER 12 Take Enough of the Right Risks.

Fatal Flaw #9: Failure to Take Enough of the Right Risks.

Risk Intelligence Skill #9: Taking Enough of the Right Risks.

CHAPTER 13 Sustain Operational Discipline.

Case Example: The U.S. Submarine Force.

Fatal Flaw #10: Lack of Operational Discipline.

Risk Intelligence Skill #10: Develop and Sustain Operational Discipline.

PART III CREATING THE RISK INTELLIGENT ENTERPRISE.

CHAPTER 14 Risk Intelligence Is Free.

A Closer Look at Costs.

The Rewards of Risk Intelligence.

CHAPTER 15 Risk Intelligent Governance.

The Risk Intelligent Board.

Committees of the Board and Risk Intelligence.

Where Does Risk Oversight End and Risk Management Begin?.

CHAPTER 16 Risk Intelligent Enterprise Management.

ERM and Risk Intelligence.

Developing Risk Intelligent Enterprise Management.

Act as One.

A New Way of Doing Business.

CHAPTER 17 The Way Forward: Creating the Risk Intelligent Enterprise.

The Benefits of Improved Risk Intelligence.

What’s Your Enterprise Risk IQ?

Making the Transformation.

Conclusion.

Notes.

About the Authors.

Index.

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Frederick Funston is a principal with Deloitte & Touche LLP and has more than thirty years of experience working with leaders of numerous global companies. In 2000, Rick created the concept of risk intelligence for value creation and value protection. He is a frequent speaker and writer on leveraging risk intelligence for competitive advantage in complex, global organizations.

Stephen Wagner is a nationally recognized thought leader on corporate governance. In 2009, Steve retired as the managing partner of Deloitte LLP's Center for Corporate Governance, where he led the firm's integrated strategy for governance services. He is a frequent speaker at governance conferences and directors' colleges and has authored or contributed to numerous articles on governance and risk.

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"The authors propose a more holistic approach of "risk intelligence," in which leaders acknowledge and prepare for a wide range of potential threats. The authors isolate ten essential risk intelligence skills-such as abandoning familiar assumptions, anticipating causes of failure, and sustaining operational discipline-and provide in-depth guidelines for how executives and board members can hone these skills. They understand that there is no reward without risk - but only if the risks are properly managed." (BizEd, July/August 2010)
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April 13, 2010
Surviving and Thriving in Uncertainty: Creating the Risk Intelligence Enterprise

Ninety-six percent of all species that have appeared on the planet are now extinct.  Unfortunately, business organizations aren’t doing much better. Critical to the survival of humans are the gifts of judgment and what neuroscientists refer to as “executive functions” in our brains, the capacity to gather and process information, and to make rational decisions and plans based on that information and on our wants and needs.  A new book from John Wiley & Sons, SURVIVING AND THRIVING IN UNCERTAINTY: Creating the Risk Intelligent Enterprise (John Wiley & Sons; $34.95; April 2010), written by Deloitte’s Frederick Funston and Stephen Wagner, authoritative sources on the concept of “Risk Intelligence,” recommends that organizations — also equipped with “executive functions” — should be stronger at exercising better judgment, even amid uncertainty and the difficulties it brings.  With practical and demonstrated advice on encouraging better decision making through risk management, this book challenges readers to a new, multifaceted, panoramic way of viewing risk that encompasses both asset preservation and value creation.

Enterprises that are most effective and efficient in managing risks to future growth and existing assets will outperform those who are less so. Competitive advantage requires calculated risk taking for reward. How to calculate risks, the reward for taking such risks, and taking enough risks are important. The intelligence to identify and successfully take rewarded risks such as entry into new markets and products, and to avoid unrewarded risks are just as important. Presenting factual, informative, provocative, and sometimes challenging views on the subject of risk management, SURVIVING AND THRIVING IN UNCERTAINTY looks at a number of realities that professionals must confront if their business is to survive and thrive. Risk Intelligence is both a product and the capability to produce it and then act and learn. The result is increased resilience and competitive advantage.  Here, readers will find essential guidance on:

  • What the Risk Intelligent Enterprise looks like
  • Why conventional risk management has failed
  • The ten fatal flaws in conventional risk management
  • And their ten corresponding enterprise risk intelligence skills
  • The rewards of risk intelligence

Drawing from the experiences and perspectives of risk warriors in and out of the business world, the world-class strategies and approaches in SURVIVING AND THRIVING IN UNCERTAINTY: Creating the Risk Intelligent Enterprise help readers get smart about managing risk.  

ABOUT THE AUTHORS:

Frederick Funston is a principal with Deloitte & Touche LLP and has more than 30 years of experience working with leaders of numerous global companies.  In 2000, Rick created the concept of risk intelligence for value creation and value protection. He is a frequent speaker and writer on leveraging risk intelligence for competitive advantage in complex, global organizations.  

Stephen Wagner is a nationally recognized thought leader on corporate governance. In 2009, Steve retired as the managing partner of Deloitte LLP’s Center for Corporate Governance, where he led the firm’s integrated strategy for governance services. He is a frequent speaker at governance conferences and directors’ colleges and has authored or contributed to numerous articles on governance and risk.  

About Deloitte

As used in this document, “Deloitte” means Deloitte LLP and Deloitte & Touche LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.  

ABOUT WILEY

Founded in 1807, John Wiley & Sons, Inc. has been a valued source of information and understanding for more than 200 years, helping people around the world meet their needs and fulfill their aspirations. Wiley and its acquired companies have published the works of more than 400 Nobel laureates in all categories: Literature, Economics, Physiology or Medicine, Physics, Chemistry, and Peace.  

Our core businesses publish scientific, technical, medical, and scholarly journals, encyclopedias, books, and online products and services; professional/trade books, subscription products, training materials, and online applications and Web sites; and educational materials for undergraduate and graduate students and lifelong learners. Wiley's global headquarters are located in Hoboken, New Jersey, with operations in the U.S., Europe, Asia, Canada, and Australia. The Company's Web site can be accessed at http://www.wiley.com. The Company is listed on the New York Stock Exchange under the symbols JWa and JWb.  

SURVIVING AND THRIVING IN UNCERTAINTY

Creating the Risk Intelligent Enterprise

Published by John Wiley & Sons, Inc.

Publication date: April 12, 2010

$34.95; Hardcover; 368 pages; ISBN: 978-0-470-24788-4 

 

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