Revisiting risk management in a time of crisis

Abstract

PurposeThe global pandemic provides boards and executives an opportunity to evaluate if their organizations’ risk management systems were up to the challenge. Organizational risk management systems act like the body’s immune system, protecting the organization from threats. Most organizations struggled to deal with the crisis caused by global pandemic, with some failing to survive. This paper reviews the risk management steps and then examines at why some organizational risk management systems may have failed to protect their organizations from harm.Design/methodology/approachThis topic was inspired by discussions with executives and board members of organizations dealing with the pandemic. The paper was written based on their comments and was supplemented and contrasted with a review of risk management literature.FindingsThe paper reviews what risk responses are effective in coping with the global pandemic and then discusses how a risk tool, the risk-value curve, can help boards and executive determine the optimal level of risk for their organizations going forward.Practical implicationsBoards and executives can use the risk responses and risk tools reviewed to evaluate the quality of their risk management systems in light of the global pandemic.Originality/valueThe paper is one of the first to critically examine why some organizational risk management systems failed and proposes risk management tools to help organizations deal with the next global crisis.