MIT Sloan Management Review

Boards have two broad responsibilities: overseeing the protection of existing value and creating new value. Even though most boards take growth seriously, in practice board oversight has become unbalanced. The imbalance between risk and opportunity is a potentially serious problem. Correcting the imbalance will require an active, constructive partnership between the board and senior leadership — and a board that understands how the company maintains a high level of value-creating performance.

Online crowdsourcing platforms are growing at double-digit rates and are starting to attract the attention of large companies. Just as cloud computing offers unconstrained access to processing capacity and storage, the “human cloud” promises to connect businesses to millions of workers on tap, ready to perform tasks and solve problems that range from the simple to the complex. The article explores four new human cloud models: The Facilitator model, The Arbitrator, The Aggregator, The Governor.

Kathleen Long is using a combination of behavioral analytics, Bayesian engineering and big data to help companies better determine and mitigate business risk.

In these days of uncertain markets – and an uncertain economy – risk can seem almost omnipresent. But how do you manage risk prudently – yet still grow your company? Harvard Business School professor Robert S. Kaplan began exploring risk management in the wake of the 2008 financial crisis, after he saw venerable firms such as Lehman Brothers and Bear Stearns collapse – despite having risk management functions. Here are a few of his insights on the topic of risk management.

When 33 Chilean miners were rescued after being trapped underground for 69 days, the world cheered. Here’s what your company can learn from key leadership decisions made during the mine cave-in crisis.

Consumers were surprised in October 2009 by the first of a series of highly publicized recalls of Toyota vehicles in the United States. Citing a potential problem in which poorly placed or incorrect floor mats under the driver’s seat could lead to uncontrolled acceleration in a range of models, Toyota announced that it was recalling 3.8 million U.S. vehicles. The article discusses two root causes for Toyota’s quality problems.

Generating good innovation proposals from within the ranks of the organization is only the beginning. The more difficult part is creating a selection process that identifies which ideas to implement.

Over the past decade, a number of the world’s respected companies have collapsed. A factor was these companies’ approach to risk management. Two different views have evolved on how risk should be assessed. The first — the frequentist view — is based on historical data. The second, or Bayesian, considers risk to be in part a judgment of the observer. Many measures are being deployed to prevent future crises — a shift from frequentist to Bayesian risk management should be part of this effort.

Most executives naturally gravitate toward one of these two approaches. The challenge is that companies need both.

What should we make of the role of financial innovation in precipitating the financial crisis — and how might problems with risk management that the crisis revealed be addressed?

There’s no sense in denying it: interpreting weak signals into useful decision making takes time and focus. These three stages can help you see the periphery—and act on it—much more clearly.

It”s time to bring morality back into finance – and time for business leaders to take risk seriously.

Next time you read that some industrial accident or disaster was caused by a worker error, be a little skeptical.

Increasing length, complexity and interdependence in supply chain contracts is resulting in more critical and costly supply disruptions, yet despite that risk, commodity procurement is mainly handled via long-term, fixed-price contracts containing naive terms and clauses in the case of breach. The risk of these breaches is very real.

Do stock options for outside directors encourage bolder decision making? Or could such financial incentives actually inhibit risk taking?

New product launches are highly complex and can pose major challenges to companies. But managing the interplay between product generations can greatly increase the chances for success.

Risk management helps people reach consensus and make better-informed decisions that lead to quantifiable results.

An organization’s ability to recover from disruption quickly can be improved by building redundancy and flexibility into its supply chain. While investing in redundancy represents a pure cost increase, investing in flexibility yields many additional benefits for day-to-day operations.

By understanding the variety and interconnectedness of supply-chain risks, managers can tailor balanced, effective risk-reduction strategies. The authors show how smart companies use “stress testing” to identify parts of the supply chain that might break in the event of a natural disaster, terrorist strike or other upheaval. They then explain a variety of ways that supply-chain partners can collaboratively prepare for and effectively manage risk.

Although large-scale risks garner media attention, it is the everyday, small-scale risks associated with a lack of transparency in countries’ legal, economic, regulatory and governance structures that can confound global investment and commerce. New research identifies the causes and measures the effects of this phenomenon.