Article Archives >> Risk and Reward >> January 16-February 15, 2010
Preview of Article:
Hiring and Performance:
Critical Areas of Risk for Every Nonprofit
By Melanie Lockwood Herman
I’ve been reading a terrific book recently titled Strategic Risk Taking: A Framework for Risk Management, by Aswath Damodaran. One of my favorite insights in the book is the reference to the work of Glyn A. Holton who posits that two “ingredients” are necessary for a risk to exist. The first ingredient is uncertainty about the outcome. Risk is only present when there is an uncertain result. The book offers a graphic but helpful example: a man who jumps from an airplane at 15,000 feet without a parachute faces certain death, not the risk of death. The second ingredient that is necessary for risk to exist is that the outcome must matter. For example, if I were to ask you to choose one of three numbered doors, there is no “risk” of loss or benefit if there is no prize or penalty associated with your choice.
Article Archives >> Risk and Reward >> January 16-February 15, 2010
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