Risk taking, the engine driving business, is vital to companies seeking market success. Risks are, however, often thought of only as hazards, despite the fact that they can present significant opportunities and possibilities for organizational innovation and new competitive advantage
leading to short- and long-term profitability.
In fact, risk and opportunity are a duality—like two sides to the same coin.
Managing hazardous risk has been increasingly recognized as a critical business issue prompted by events as diverse as the financial debacles of companies like Enron,Worldcom, and Parmalat, the terrorist events of September 11, 2001, and the hurricane disaster of Katrina in 2005. CMA Canada,
the AICPA, and CIMA have responded with four Guidelines that address this issue:
a) “Identifying, Measuring, and Managing Organizational Risks for Improved Performance”;
b) “The Reporting of Organizational Risks for Internal and External Decision Making”;
c) “Integrating Social and Political Risk into Management Decision Making”;
d) “Business Continuity Management”.
Though these four Management Accounting Guidelines on risk provide excellent coverage of many of the most critical issues in risk management, they conceptualize risk as it is typically defined—as a potential hazard.They examine how organizations can protect themselves against various risks by
preparing for, mitigating, and responding to them.
These Guidelines do not, however, elaborate on the fact that risks are not only hazards that should
be avoided but are also opportunities that propel business growth. By focusing on the downside of
risk, companies can sometimes forego opportunities that might initially appear too risky, but which
have never been formally analyzed.
Continue at: http://www.cimaglobal.com/Documents/ImportedDocuments/cid_mag_managing_opportunities_and_risk_march08.pdf.pdf
The text above is owned by the site above referred.
Here is only a small part of the article, for more please follow the link