Risk Management Strategies in the Global Environment

“Nothing splendid has ever been achieved except those who dared believe that something inside of them was superior to circumstance.” – Bruce Barton

            Today more than ever before, business professionals and leaders are challenged with increasingly difficult and diverse responsibilities, including understanding and employing decisions based on intense and complex business theories. Leaders also face a myriad of internal and external factors driving success or failure in enterprise business. In the age of dynamics and diverse global business enterprise, business professionals need to expand their existing base of knowledge related to various risk management strategies to be successful in the marketplace. Risk management process involves assessing, or evaluating risk and developing management strategies to mitigate them. These strategies include risk transfer, risk avoidance, and accepting some or all the risk. Financial risk management strategies focus on risk managed through financial instruments.

            To achieve sustainable competitive advantage, the organizations have to be creative with innovation and adaptable to dynamic risk management strategies. Today more than ever, the premium comes from the fusion of invention and insight into how to transform how things are done. In addition, the spread of shared technologies and business standards is creating an unprecedented opportunity for global integration, not just within each sector of society, but across them all. As the boundaries between the traditional "estates" become more porous, new businesses can contribute new forms of commerce, learning, and good governance.  One of the way to handle the risk is to integrate the business in a global level.

Globally Integrated Enterprise Approach

            The globally integrated enterprise will require fundamentally different approaches to production, distribution, and work-force deployment. Apart from off- loading non-core activities, the efforts are used for integrating the organization in multiple ways among suppliers, and customers.

Opportunities and risks

            The globally integrated enterprise can deliver enormous economic benefits to both developed and developing nations. The integration of the workforce in developing countries into global systems of production is already raising living standards, improving working conditions, and creating more jobs in those countries. Small and medium-sized businesses everywhere, particularly, are benefiting: as new services— from back-office administration to sales support—create infrastructures once only affordable to large organizations, these businesses can now participate in the global economy.

            Shifting to the model of globally integrated enterprises also presents big challenges for leaders in every sector of society. The very fact that so many more people all over the world are gaining equal access to the production process and the marketplace means much more trade and competition. Although this will create wealth and opportunity, it will also bring disruption and fear, both of which could threaten global integration. Legitimate concerns about job loss and skill shortages must be addressed in realistic and constructive ways.

            The single most important challenge in shifting to globally integrated enterprises—and the consideration driving most business decisions today—will be securing a supply of high-value skills. Nations and companies alike must invest in better basic educational and training programs. New kinds of managerial skills are also needed. Hierarchical, command-and-control approaches simply do not work anymore. They impede information flows inside companies, hampering the fluid and collaborative nature of work today. This is a key consideration in modern day organizations.

            Globally integrated organizations are seen as the next generation which optimizes operations and reduce cost by cutting down non-revenue generating expenses and reduce risk in a global context. Early adapters of this approach like IBM have proved the efficacy of this model.

Conclusion

            Success of any organization depends on organizational leaders. So this discussion brings in challenging questions to board members and senior executive leadership. Are they looking for only short-term financial results or long-term organizational results by handling global risk effectively?  In a fast-changing world, organizations are looking for transformational leaders who have the vision to translate the organizations into high performing cultures in a globally integrated enterprise. This is a challenging task worth emulating.
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Regards,

Saju Skaria

SajuSkaria@gmail.com