Set clear goals Establish a clear set of goals that tie back to your purpose. This helps to establish a moral framework for the company and lays the groundwork for a renewed strategic focus. CEOs must take responsibility to establish a clear purpose for the business and communicate this value to employees. Share a clear purpose Purpose is much bigger than financial outcomes - it is about a higher good. So, here is how to focus on what really matters, while creating an environment where damaging decisions are avoided. It is a drag on performance and creates a culture of fear, rather than encouraging rapid progression and innovation.įortune rewards those who have the strength to look beyond the fear of risks. Risk management is all about avoiding negative outcomes, but focusing on uncertainty harms your ability to produce great results. Instead, focus your energy on where you are headed.

The real risk to your business is in your business strategy and product plans. Corporate strategy officers estimate that the rate of revenue growth might double if they could only be bolder in their decision-making. We know this is true for organizations because approximately 86% of market value loss over the last decade can be attributed to a lack of attention to strategy.Ī hunker-down approach only hurts growth and slows down progress. They ignore their own thinking and plans - to their detriment. They spend half their time evaluating legal, compliance and financial reporting risks but focus little attention on what actually matters most. This applies to people and economies.īut that is what companies and regulators do. It is not something that can be retrospectively solved, because risk is constantly shifting. The problem is, you cannot manage risk looking in the rear-view mirror. And after our latest financial crisis, banks altered their business models, while businesses clamped down on credit and made sure they were not placing too much faith in mathematical calculations. The United States Sarbanes-Oxley Act of 2002 sought to protect shareholders and the public in the wake of Enron and Worldcom. You can often look to governments for wide-scale risk management policies. Unfortunately, we all are prone to worrying about the wrong types of errors and avoiding what seem like the most dangerous risks. And when I write “we” I mean you and me, the companies that we work for, and the institutions that govern us. We try not to repeat the same mistakes when bad things happen.

Fortune helps the brave meaning