Strategic Risk / Uncertainty

Risk is defined as the assessment of the severity, amount and nature of losses which an action may incur

Uncertainty is the limits and precision and the extent of knowledge about an event or subject

Categories of Risk Strategy.........Changing patterns of demand...............Exogenous Operations......Mfg/process systems...........................Exogenous Economic........Changes in interest rates.....................Exogenous Hazards..........Natural disaters..................................Exogenous

E.g. Bhopal was an eg of man made risk of not adopting to new technologies (Endogenous)

Organizational and Manergerial Risk MR is where managers make choices associated with uncertain outcomes OR is where orgs face volitile income streams associated with turbulent environments

Org Risk factors Complex/Simple Environments............................The more complex the more risk Scarcity/Munificence...........................................Abundance provides a context where greater risk can be taken

Managerial Risk factors Aspirations/Expectations.....................................Higher expectations mean better performance is more likely and less risk Top-Team Characteristics...................................Higher levels of heterogenity is likely to promote risk Ownership.........................................................Managers who do not have equity stake are less likely to take risks