By Robert S Kaplan & Annette Mikes, Harvard Business Review, June 2012

In this article, we present a new categorization of risk that allows executives to tell which risks can be managed through a rules-based model and which require alternative approaches. We examine the individual and organizational challenges inherent in generating open, constructive discussions about managing the risks related to strategic choices and argue that companies need to anchor these discussions in their strategy formulation and implementation processes. We conclude by looking at how organizations can identify and prepare for nonpreventable risks that arise externally to their strategy and operations.

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