Risk-taking is a characteristic that inculcated into human nature. The child takes the risk of falling down and injuring himself for a tradeoff of learning to walk. In the primitive age, man grew up weighing up the risks of attacking others against the reward of acquisitions. In later stages, he invested in the planting of crops for the reward of the harvest, and offerd sacrificess to the gods in expectation of reward in the afterlife. Taking the opportunity out of risk and taking the risk out of opportunity are thus natural. This became stronger and extended to business propositions as civilizations evolved.
Today, change has become unavoidable ingredient of the world - especially financial world. Though one cannot predict the future, one can always prepare for contingencies and steer the results to one's desired objectives. Even if one does not succeed, one can minimize the losses. An IBM global survey of 450 CEOs conducted in 2004 highlighted that CEOs placed a very strong emphasis on business resilience and continuity which in turn depended on the capability to sense and respond to unexpected events and opportunitiesranging from natural disasters to sharply increased consumer demand - and smoothly maintain business operations. And that is the essence of risk management.
Risk management has of late become an integral part of management in different activities ranging from nuclear energy to policing initiatives, even if different terminology has been used. This is more pronounced in areas where there is sufficiently reliable data to use mathematics to produce useful quantitative analysis. |
