A Rebirth of Risk Management

By Troy, Edward G. | Risk Management, July 1995 | Go to article overview

A Rebirth of Risk Management


Troy, Edward G., Risk Management


Over the last ten years, U.S. business has undergone dramatic functional and financial changes. As a result, companies now are stronger and better able to compete in world markets. Achieving these results, however, has required them to get all aspects of their businesses operating at peak performance. Companies have broadened authority, eliminated low- or no-value activities and restructured traditional roles and responsibilities.

In this new era, many corporations are broadening the responsibilities of the risk manager. To meet these new requirements, risk managers are utilizing new technologies to optimize operations and integrating new products and services available for risk management such as managed care and litigation management programs.

Five major forces are influencing the role risk management will play in the business environment of tomorrow: 1) the integration of risk management into the corporate management process; 2) a shift in senior management's expectations of risk managers; 3) fundamental changes in the nature of work and how it is performed in contemporary businesses; 4) the impact of new technologies, which have facilitated greatly information access and use; and 5) the rapid development of a "New Economy."

As the next century approaches, these forces will propel risk management into a new position within companies. Although the effect of these forces and their impact on risk management will differ from organization to organization, these changes are likely to expand greatly the role of the risk manager.

INTEGRATION

The first major force is the greater integration of risk management into the corporate management process. Over the last several years, senior managers have learned that the principles of risk management can be broadly applied in their organizations. For example, risk management principles can be utilized in areas such as expanding operations into new markets and building new facilities.

Top executives at successful companies also realize that risk management programs are best developed and implemented before losses occur. These companies include loss prevention and loss response planning within the scope of risk management. On a broader level, senior management at many companies are including risk managers in cross-functional teams that develop products, provide consultation to manufacturing operations and review marketing distribution plans.

The role of risk management must also encompass financial risk assessment. When a company plans a merger or acquisition, the risk manager acts as a key member of the evaluation team. Since the impact of assumed uninsured losses and liabilities can make or break a deal, the risk manager must assess these issues during the due diligence phase. Many companies now have an increased sensitivity to the impact of these financial risks on their operations. As a result, these firms require risk managers to become increasingly involved in key financial transactions.

In many organizations, risk managers are assuming the important role of "crisis" manager. When a crisis strikes, these risk managers have the task of exerting leadership and coordinating both public and internal activities. Typically, the risk manager will help assemble a "crisis team" that applies various interdisciplinary skills to manage a successful outcome of the event. The risk manager's role in this process usually includes the development of a crisis contingency plan and its full-time execution. Whether the crisis is a fire or a failed product, the threat to the viability of a business is considerable, so decisive action is needed to mitigate loss.

REDEFINING RISK MANAGEMENT

The second major force operative in companies today is the redefinition of risk management and the expectations senior executives have for risk managers. Previously, the job description of "risk manager" was narrowly defined as the person who works with insurers and brokers to purchase insurance products.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

A Rebirth of Risk Management
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.