Management Tip of the Day: An open discussion of risk

BOSTON Wed Jul 4, 2012 11:18pm EDT

Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking

Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009.

Credit: Reuters/Rick Wilking

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BOSTON (Reuters) - Some risks arise from events outside the company that are beyond its influence and control. It makes sense to openly discuss what those risks could be as a way to manage the unexpected, says Harvard Business Review.

The Management Tip of the Day offers quick, practical management tips and ideas from Harvard Business Review and HBR.org (http:\\www.hbr.org). Any opinions expressed are not endorsed by Reuters.

"You can monitor and control preventable risks — such as those resulting from employees' actions or breakdowns in routine operational processes — by setting rules and using standard compliance tools. But, rules often can't prevent strategic and external risks, neither of which you have much power over.

To deal with these kinds of risks, encourage managers to openly discuss them. Use tools, such as maps of likelihood and impact and help team leaders envision risks through scenario planning. Then engage them in finding cost-effective ways to manage those potential risks that can't be avoided by regulation alone."

- Today's management tip was adapted from "Managing Risks: A New Framework" by Robert S. Kaplan and Anette Mikes.

(For the full post, see: here)

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