Strategic Risk Taking: A Framework for Risk Management

Chapters 9-12 . Risk Management: The Big Picture

The last four chapters in this book represent the heart of the book, insofar as they are focused directly on risk management, rather than on the economic underpinnings of risk aversion or on risk assessment. We begin in Chapter 9, “Risk Management: The Big Picture,” by defining our objective in risk management as increasing the value of the businesses we run, rather than reducing or increasing risk exposure, and follow up by developing a valuation framework that incorporates all the elements of risk management. We end the chapter by arguing that the key to successful risk management in a business is the decomposition of risk into risk that should be passed on to investors in the company, risk ...