Fundamentals of Enterprise Risk Management by John J. Hampton

Author:John J. Hampton [John J. Hampton]
Language: eng
Format: epub
ISBN: 9780814449042
Publisher: American Management Association, AMACOM Division

Scanning Post-2014

From this historical perspective, we know where we are—or where we think we are. What comes next? What sources of strategic risk are on the horizon? Here are some nominees:

Emerging Nations. China and India, with 36 percent of the global population and growing economies, need constant surveillance. We should not overlook emerging countries and regions as well, particularly Pakistan, Indonesia, and the Middle East. In 2002, everybody was investing in China. When intellectual property problems surfaced in 2004, the focus switched to India and opportunities in Mumbai, Chennai, and Bangalore.

Developed Nations. The financial crisis that began in 2008 caused the landscape to shift again with crises in home mortgages in the United States and a later Eurocurrency crisis.

Turbulent Nations. The Arab Spring in 2010 and demonstrations in Egypt, Ukraine, Thailand, and elsewhere created chaos that destroyed many prior strategies for economics and politics.

Technology and Knowledge. Everything a business needs with respect to information and strategies can be carried in small portable devices. All of our plans and proprietary secrets can be leaked via the Internet or misbehavior. Today’s innovative new product is tomorrow’s obsolete relic. Strategic risk tells us to check constantly the validity of a budget prepared just a few months ago, a strategy that took much time to create, and an assumption that seemed quite reasonable just yesterday.

Logistics. A company’s raw materials are likely to come from 20 suppliers in 15 countries, and its components are probably fabricated in six different countries. Czechs who update massive databases and Mexican engineers who upgrade computer and telecommunications systems all support the supply chain. Products designated for customers in North America are shipped at the last minute through the congested and vulnerable port of Shanghai. We must carefully manage redundancy and stability in the supply chain.

Cyber Risk. This is a massive exposure. Chapter 17 examines it in detail.

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