Risk has been a top-of-mind consideration since September 11, but corporations are also concerned with less catastrophic forms of risk: customer credit problems, labor strikes, changes in market acceptance or energy prices — any type of uncertainty that could cause their businesses to stray from plan. The increased pace of change in the business environment not only accentuates risk, but also shrinks the time available for planning, evaluation and adjustment.Academic research into the role of uncertainty in strategy formation frequently delves into modern portfolio theory to explore frameworks for factoring risk into strategic decision making. Nevertheless, the gap between theory and management practice remains large, according to a 2002 working paper, “Risk: A Neglected Component of Strategy Formulation.” The paper is by Eli Noy, an adjunct lecturer of strategic management at Tel Aviv University, and Shmuel Ellis, a senior lecturer of organizational behavior and management at the same university.I
