Risk Management

Good leaders need to be experts at risk management.  This is true in a wide variety of business situations including developing and launching new products, making investment decisions, opening new markets, managing projects, hiring people, building new facilities, selecting new suppliers, implementing new information systems, designing new processes, and writing legal contracts.  In fact, leaders should use risk management thinking in almost everything they do.  This paper teaches four steps for risk management:  (1) identify potential adverse events; (2) propose risk mitigation projects; (3) prioritize risk mitigation projects; and (4) execute risk mitigation projects.  The appendix presents a complete description of the Failure Modes and Effects (FMEA) methodology and offers several criticisms of this methodology.