Real-Life Decision Making
The nature of risk management sees it go hand in hand with decision making.
A risk manager is sort of an in-house consultant for upper management decision-makers.
Progressive organizations rely on their feedback when planning any move. Risk
managers will often analyze and weigh the risks involved in all possible outcomes
of a decision, then recommend the proper course of action.
"You have to first recommend the types of insurance and other risk management
programs," says James Coyle. He is the director of the Public Risk Management
Association.
"And you're often called on to make decisions about liability cases.
In other words, if you have a big suit in front of you, the council might
be saying we need your recommendation on how we should proceed on this --
should we pay out, or do we have grounds to fight it?
"It doesn't require a lot of direct decision making because risk managers
don't often make the final decision," adds Coyle. "But you have to understand
how decisions get made in those environments, and how to provide the right
information to the people who need your support."
Some of the toughest judgment calls involve deciding how to best deal with
a situation where public opinion is at stake. Playing politics is part of
the unofficial job description of many risk managers whose governments or
products are in the public eye.
"Politics will often come into play in the decisions I deal with," says
Ruth Unks. She is a risk manager. "I always have to weigh how is this going
to look if it was on the front page of the newspaper tomorrow. How is this
going to impact my governing board? Is this something that they would want
me to recommend?"
You're a risk manager for a large designer clothing label. The company
wants to head off competition by expanding operations into Southeast Asia,
where labor is cheap. But because its image is so based in an American identity,
it doesn't want to attract any media attention to its questionable presence
in that part of the world.
It's up to you to weigh the pros and cons of the expansion, and advise
the company planners as to whether it would be too risky a move. You look
at the past ventures of similar companies in that area and determine certain
risks: earthquakes, fires, currency fluctuations, shaky political situations
and damage to reputation caused by crooked managers who enlist child labor.
What do you do?