Gaining a New Understanding of Risk – Improvisations - MIT Sloan Management Review. In these days of uncertain markets – and an uncertain economy – risk can seem almost omnipresent.
But how do you manage risk prudently – yet still grow your company? Harvard Business School professor Robert S. Kaplan began exploring risk management in the wake of the 2008 financial crisis, after he saw venerable firms such as Lehman Brothers and Bear Stearns collapse – despite having risk management functions. Strategy under uncertainty - McKinsey Quarterly - Strategy - Strategic Thinking.
At the heart of the traditional approach to strategy lies the assumption that executives, by applying a set of powerful analytic tools, can predict the future of any business accurately enough to choose a clear strategic direction for it.
The process often involves underestimating uncertainty in order to lay out a vision of future events sufficiently precise to be captured in a discounted-cash-flow (DCF) analysis. When the future is truly uncertain, this approach is at best marginally helpful and at worst downright dangerous: underestimating uncertainty can lead to strategies that neither defend a company against the threats nor take advantage of the opportunities that higher levels of uncertainty provide. Another danger lies at the other extreme: if managers can't find a strategy that works under traditional analysis, they may abandon the analytical rigor of their planning process altogether and base their decisions on gut instinct.
Four levels of uncertainty Level four: True ambiguity. Innovation Excellence Group News. “We’re taking analytics from a planning perspective to a planning, execution and evolution perspective,” says David Kreutter, VP, US Commercial Operations at Pfizer Inc. As a result, analytics has become “much more operational than it’s been in the past.” advertisement David Kreutter, Vice President of US Commercial Operations, Pfizer The ways that Pfizer Inc., the global pharmaceutical company, uses analytics is changing, in no small thanks to the pressure on physicians to prescribe generic rather than brandname drugs. David Kreutter, VP, US Commercial Operations, is accountable for Pfizer’s U.S. commercial operations, including business analytics.