LIFE CYCLE RISK
Another risk not assigned to a single risk owner is life cycle risk— the reality that business units and lines of business start up, grow to maturity, and, in many cases, enter a period of stagnation or decline. The challenge for a central risk function is first to understand life cycle risk and then to identify the stage of the life cycle for different units.Most large companies have units at different stages in the organizational life cycle. The four stages of the life cycle are these:
RISK QUOTE: It’s gonna be a long hard drag, but we’ll make it.
—JANIS JOPLIN, SINGER AND SONG WRITER
RISK QUOTE: The superior man makes the difficulty to be over-
come his first interest; success only comes later.
—CONFUCIUS, CHINESE PHILOSOPHER
|•||1. Startup. The birth of a unit. It occurs when a company invests money in a new operation, assigns managers and workers to build the unit, and designs a product or service to bring it to market. The unit focuses on a business model.|
|•||2. Growth. The period of rapid expansion when the unit has brought products or services to market and now seeks strong growth of revenues and expansion of the workforce.|
|•||3. Peak. After a period of growth, the unit reaches maturity. If successful, the unit sells its products or services at prices and|
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Publication information: Book title: Fundamentals of Enterprise Risk Management: How Top Companies Assess Risk, Manage Exposures, and Seize Opportunities. Contributors: John J. Hampton - Author. Publisher: American Management Association. Place of publication: New York. Publication year: 2009. Page number: 185.
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