Who in business truly understands what risk is and how to manage it? Not many I would suggest given the recent crisis in banking and even fewer when it comes to resolving national debt levels. Risk has to become better managed by businesses and politicians if we are to avoid the full effects of the current financial climate.

Risk is key in assessing opportunity as without risk business opportunities would not exist. Everything would be obvious and therefore every opportunity would be seized instantly without fear of failure. Well, human nature does not function that way! Humans are naturally risk averse, our survival instincts steer us away from perceived danger in order to protect us and in doing so they prevent us from exploiting opportunities using our innate intellect to manage and mitigate the risk. It is only when we are forced to take risks that we bring our excellent risk management potential to the fore.

However the national picture is somewhat different national risk now that’s something we leave to the experts  expecting them to use rigour and expertise in their deliberations. Unfortunately many of today’s politicians are not expert and many are less than rigorous in their managing of national financial risk!  Some are just politically irresponsible scoring political points when there is a national debt crisis.

Personal opportunities exist in all our lives and yet we  nearly always shy away from them. We want to be popular, we want to look good, we want to conform and to be correct.  We want to be recognised and rewarded and those actualisation’s are normally associated with conformity rather than originality.  Yet being odd pays in today’s entrepreneurial world as risk takers reap the greatest rewards. Our herd instincts our desire for popularity drive the majority of us away from risk naturally and hence how many times have we not seized an obvious opportunity for fear of failure!

If as individuals we don’t take risks there is very little chance of  business organisations taking risk. The consequences don’t just affect me but all those around me. I do not want to be blamed by those closest to me for strategic failure. Recently businesses have not needed to take risks hence risk mitigation is a lost art to many organisations. Yet business leaders are paid to judge and mitigate risk. Today’s business leaders need to take risks and they need to understand those risks, to identify the warning signs that pre-empt failure. Life is risky and in extreme times life becomes more risky.  Yet  as we enter a global recession no leader seems able to grasp the nettle and seize the opportunity; rather they would follow like lemmings other organisations into the economic precipice.

Politics are a totally different matter and it is here where some of the finest aspects of democracy are exposed as the desire to conform so necessary as an elected politician prevents daring and risk mitigating  leaders from ever achieving political greatness. Bring on the benign dictator or the enlightened autocrat for they are the ones who will light the path to economic recovery. They would take risks and their enlightened approach would ensure that in exercising their judgement they had mitigated the risk  to their people and managed it accordingly to ensure success.  As true leaders they would focus on success rather than avoiding failure. Tough times need tough decision makers who may not choose to conform. The only issue is democracy after all a leader cannot lead without the  peoples’ mandate and yet the majority of the people will always vote for the politician or party who holds the middle ground .

Businesses are the same and businesses now need to be original in their strategic concepts if they are to lead others away from global recession. Strong leadership, strategic vision,  opportunity exploitation and risk mitigation are all essential characteristics required of today’s business and political leaders and yet they are the characteristics that have  been absent when strategic failures are analysed.

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