Courtney Lends Insight to EIU Report on Risk Management

Hugh Courtney, professor of the practice of strategy and vice dean of the Robert H. Smith School of Business, is among a select group of experts worldwide who contributed to a recently released report on strategic risk management.

Courtney commented on subtopics such as scenario planning in Getting New Perspective on Strategic Risk, published by the London-based Economist Intelligence Unit. The EIU is part of The Economist Group, which publishes The Economist newspaper. The study indicates many business leaders naturally focus attention on the immediate future and ensure short-term financial obligations are met. However, the report also warns that businesses limit their chances for sustainable success by prioritizing short-term profits over long-term performance.

Key findings include:

• Long-term risk management is rising on the agenda for many business leaders.
• Links between risk management and strategy are strengthening in many organizations.
• The time horizons for strategy and risk are often misaligned.
• A short-term focus among business leaders can prevent a more thorough assessment of long-term risks.
• Risk functions need to do more to challenge entrenched views of the future.
• Many companies are using scenario planning, but few embed it into the overall strategy process.

Courtney, in the report, stated that scenario planning should be applied carefully and not as a means to predict the future or validate specific strategies. "Scenario plans don't necessarily need to inform the big strategic decisions on the day, but they do begin to frame the longer-term opportunities and threats that companies might face," he said. "They start to lay the groundwork for the investment paths that companies might need to explore."

To view Getting New Perspective on Strategic Risk, go to http://www.businessresearch.eiu.com/long-view.html