Here is a short description of each chapter:

• Chapter 1: Introduction
• Chapter 2: History of Risk
• Chapter 3: Psychology of Risk
• Chapter 4: Theory of Risk
• Chapter 5: Eating the Elephant
• Chapter 6: Business risks
• Chapter 7: Strategy & Project Suitability Risks
• Chapter 8: Planning & Project Delivery Risks
• Chapter 9: Transaction Risks
• Chapter 10: Risk Culture
• Chapter 11: Performance
• Chapter 12: Conclusions

Chapter 1: Introduction

To understand how risk and opportunity can be managed well  we must  understand how they are used from the boardroom to the point of transaction delivery. We aim to answer the following questions:

• What exactly are risk and uncertainty?
• What is the relationship between risk, opportunity and business performance?
• Why does a board’s perception and appetite for risk often seem different from that of managers and local leaders?
• What is the role of information in risk management? Can we ever have too much information? And is there a danger of risk management becoming an expensive bureaucracy?
• At what point should we accept risk management is not a science but a business judgement on what should be done?
• Why do successful business leaders in big and small businesses and different industries choose to take different approaches to risk and opportunity management?
• In recent decades business leaders have been developing management philosophies to manage particularly complex risks and objectives. Learned institutions are often established which deliver training, hold lists of certified practitioners and support the development of management standards and bodies of knowledge. Examples include asset management, risk management, health and safety, cyber protection, project management, clinical safety and process risk. What is their role in risk and opportunity management?
• Why and how is organisational culture so important in determining how an organisation manages risk, innovation and opportunity?
• There are many new management systems which aim to manage risk and deliver compliance. They have names such as Enterprise Risk Management (ERM), Governance, Risk Management & Compliance (GRC), ESG (Environmental, Social and Governance) and Integrated Risk Management (IRM). How do they fit into the ‘risk landscape’?

Chapter 2: History of Risk

We look at the gradual change in how we manage risk and opportunity through the ages. We do this by looking at three of the oldest subjects, namely:

• Healthcare and medicine: In ancient times people would try almost anything to live longer.
• Theology and government: How leaders have managed community risk and opportunity.
• Industry: From games of chance and cheating to trading, finance and insurance.

Throughout history, we have witnessed the replacement of superstition with logic and knowledge. This has allowed increasingly rational prioritisation of opportunity and risk. Yet, for millennia, each generation has tended to believe they have reached the pinnacle of understanding.

Chapter 3: Psychology of Risk

Humans have achieved remarkable success as a species, partly due to their occasional engagement in irrational risk-taking and seizing of opportunities. These biases and their sometimes peculiar and tragic outcomes are worth exploring. In the context of today’s nuclear, chemical, AI and biological advancements, it is crucial to question whether these ancient behavioural patterns will continue to benefit us in the future.

Chapter 4: Theory of Risk

The word ‘risk’ is one of the most commonly used words, yet its definition, measurement and management often results in complexities. For example, if an organisation has no ambition it also has little risk, so it will likely fail to achieve any challenging objectives. That does not feel like a success! This chapter examines the most prevalent definitions of risk management terms and delves into the fundamental theory of risk management. Subsequent chapters expand upon this foundation, exploring how business and thought leaders have applied these concepts to capitalise on opportunities and mitigate risks.

Chapter 5: Eating the Elephant

In order to eat an elephant, it must first be broken down into manageable parts. Understanding risk and opportunity is similarly difficult as it influences every choice we make, from boardroom discussions to day-to-day activity. If we are to make sense of risk and opportunity in a business context, we also need to find some way of carving up the risk/opportunity elephant.

To do this we have broken the risk and opportunity landscape into a four-level hierarchy. At each of the levels in this hierarchy, organisations need to choose their objectives which then allows them to assess and manage their delivery risks. In the next four chapters we will examine the tools and systems organisations use to do this.

We examine the significance of information availability and the complexity of business in determining the ease with which risks and opportunities can be managed safely.

Chapter 6: Business Risks (Level 1)

In this chapter we examine how corporate governance and regulation have changed how boards are required to manage and report business risk. We discuss how effective boards navigate their organisation’s most significant risks and opportunities. The focus areas include board composition, dynamics, the function of audit committee, internal audit, and the collaboration between executives and the board. We also review the value of various companies’ public statements regarding their approach to risk and opportunity management. While managing risk and opportunity is crucial, adeptly handling a crisis is equally vital, as evidenced by the unexpected emergence of Covid-19 in 2020.

Chapter 7: Strategy & Project Suitability Risks (Level 2)

A key role of the executive team is to deliver the organisation’s business objectives and manage associated risks by prioritising and creating effective delivery strategies and projects. As outlined in Chapter 5, these are referred to as Level 2: Objectives, which lead to Level 2: Strategy and Project Suitability Risks. This chapter explores various techniques used by business executives to do this.

Studies indicate that managers and business leaders often hold biased views of matters such as the quality of their own services and products and customer satisfaction. The chapter discusses methods that enable the quantification of customer and stakeholder requirements.

Businesses with large opportunities may be prepared to accept more risk and failure if it allows more progress and growth. Similarly, small highly entrepreneurial businesses with little to lose and possibly much to gain will also adapt their approach to risk and opportunity to reflect this.

Chapter 8: Planning & Project Delivery Risks (Level 3)

In this chapter we look at the techniques organisations use to choose and prioritise their level 3 objectives and manage the risks inherent with those proposals.

As we move from level 2 objectives/risks to level 3 objectives/risks the number of issues and conflicts rises exponentially. Progressively more of these decisions are becoming managed by information systems. However, other matters are either too changeable or complex for this approach. Historically the only option was to delegate authority to local teams to manage these issues, and there are obvious advantages and disadvantages of this approach. As a consequence, inventive business leaders have developed and are rapidly improving integrated business systems to give them more control over risk and opportunity. Examples of these integrated management systems are:

• Risk/compliance management systems
• Occupational health and safety management
• Asset management
• Project and programme management
• Process safety management
• Clinical safety management

In this chapter we look at the architecture of some of these systems and who is able to secure assurance that the business is efficient, effective and compliant.

Chapter 9: Transaction Risks: (Level 4)

Transaction delivery constitutes a significant portion of an organisation’s activities and costs. The most efficient and effective organisations across industries use information systems to their fullest potential. This chapter examines how organisations ensure efficient transaction delivery, maintain quality and comply with regulations. It delves into the challenges faced by complex industries like medicine, professional services, crafts and academic research, where managing productivity and quality is challenging. Finally, it considers the potential impact of Artificial Intelligence (AI) and Machine Learning (ML).

Chapter 10: Culture

In previous chapters we examined the theory of risk, plus numerous tools and systems to prioritise opportunity and control risk. However, organisational culture is arguably the most important single requirement for success. A positive organisational culture can make poor systems work well and a toxic culture can prevent the best systems from being effective. In this chapter, we explore the contributions of some of the foremost thinkers in these fields to investigate why culture is so important for risk management, we inquire whether a ‘risk culture’ exists, and we examine tools designed to measure and benchmark it. We also explore why CEOs appear to have higher appetites for risk than their local leaders.

Chapter 11: Performance

We begin this chapter by exploring how organisations can drive high performance through targets, sanctions and rewards. This requires managers having enough oversight to require and recognise efficient and effective work. In industries with high levels of unmanaged complexity, essential performance information may be lacking, making it difficult to drive performance. We also examine research indicating that, within certain parameters, the withholding of contingencies and resources can lead to improvements in productivity, compliance, creativity and quality.

We investigate how a positive culture can inspire high performance. It is not only an extremely potent dynamic but can also foster high-performance teams in complex business environments. We assess the effects of detrimental issues such as blame on a culture of risk-taking and innovation. For these reasons, incentives like ‘carrots’ are often more effective than punitive measures like ‘sticks’.

Chapter 12: Conclusions

This chapter summarises the whole book, and it is designed for the time-starved reader.

We examined many tools and case studies which describe how risk and objectives can be prioritised and managed. These tools can be particularly helpful as human nature can distort our perception of value and risk. However, tools can only do so much and a mechanistic or bureaucratic approach to risk, opportunity and performance management adds cost and little value. Small businesses and fast-growing organisations also need a different approach.

Ensuring the right cultures and behaviours exist is critical, and for complex industries where supervision of skilled staff is difficult, inspiring the required behaviours may be the only effective tool.

The art of taking worthwhile risk requires better understanding of the cost of missed opportunities.