Risk Management : From Portfolio Strategy to Value-Creating Systems Strategy

This paper is concerned with those actions of business firms which are aimed at managing the business and economic risks and uncertainties. The standard example of risk management is finance and insurance but these only capture a small fraction of the business risk faced by a company in a competitive market. These quot;standardquot; risks are often dealt with through specialized activities but here what the firms do to manage their total quot;market access risksquot; is discussed. The analysis goes beyond, but includes, and builds on, insurable and financial risks to include risks in the firm's customer's processes, the use of IT in this process, and the economic system. The issues explored are: understanding the quot;new business logicquot; and its risk; how offerings have become service offerings; management of risk and uncertainty in a more systemic way. A new quot;risk mapquot; is presented as a tool to analyze the management of risk in a quot;systemicquot; context argued to be more relevant to today's risk management challenges. This new, broader scope has new demands on knowledge and systems for effective management. As a conclusion, five historic steps are identified, tied to the new risk map, which show the gradual build-up of the product offering to a service offering and its actions to manage, and ultimately price, the risk management in the offering