What Is Business Risk? (summary)

August 23, 2023 | McKinsey & Co.

An organisation faces business risk when it is exposed to a situation that can lead to decreased profits or even bankruptcy. This article explains the importance of managing that risk.

Risk management strategies:  three components of a robust risk management strategy are:

  • – detecting risks and controlling weaknesses
  • – assessing risk appetite
  • – deciding on a risk management approach
  • Risk-based cybersecurity approach – the article describes how a risk-based approach to cybersecurity can help organizations prioritise and mitigate their most critical vulnerabilities and lists eight actions to implement it:
  1. fully integrate cybersecurity into the enterprise risk management framework
  2. identify the sources of enterprise value
  3. define the vulnerabilities within your people, processes, and technology
  4. determine threat actors and their techniques
  5. categorize and address vulnerabilities
  6. build a risk-based cybersecurity model
  7. implement the model and monitor its performance
  8. continuously improve the model and adapt to changing conditions
  • Scenario planning and big bets: scenario planning can help business leaders understand uncertainty and challenge conventional wisdom also how to make the right investments in risk management especially for high-consequence, low-likelihood risks

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