What is Strategic Risk Management?
Description Although Adrian J. Slywotzky and John Drzik of Mercer did not conceive the terminology Strategic Risk Management (SRM), they deserve credit for their excellent description of it in an article in the Harvard Business Review of April 2005. SRM is a technique that can be used for devising and deploying a systematic approach for managing strategic risk, the array of external events and trends that can devastate a company’s growth trajectory and shareholder value. The authors distinguish 7 Classes of Strategic Risk, with underlying subcategories. (some typical countermeasures in italic): • Industry • Margin Squeeze – shift the compete / collaboration ratio • Rising R&D / capital expenditure costs • Overcapacity • Commoditization • Deregulation • Increased power among suppliers • Extreme business-cycle volatility • Technology • Shift in technology – double bet • Patent expiration • Process becomes obsolete • Brand • Erosion – redefine the scope of brand investment, reallocate you
