Consider these competitors:
- Toyota vs. Ford
- Coach vs. LVMH
- Target vs. Sears
- Tsutaya vs. Blockbuster
- Apple vs. Sony
- Samsung vs. Motorola
In each case, the first company has achieved standout returns and higher growth with lower risk than its major rival. It’s possible to achieve stunning business success while reducing the level of risk you assume.
The Upside: The 7 Strategies for Turning Big Threats into Growth Breakthroughs
Traditional risk management focuses on hazard risks (fire, flood), financial risks (bad loans, interest rate swings), and operating risks (the computer system goes down, an employee steals). While these kinds of risk are important, strategic risks can be even more dangerous and pervasive. We’ve identified seven categories of strategic risk you need to anticipate:
Project risk
The very common risk that a costly investment in a new product, an acquisition, or a systems overhaul will fail
Customer risk
Your customer base is decimated by shifts in needs and priorities that make your product or service offerings less appealing or irrelevant
Brand risk
The value of your brand collapses suddenly, or gradually shrinks in the wake of competitive assaults, economic changes, disastrous publicity, or long-term failure to invest
Industry risk
Your market gets so saturated and competitive that the entire industry becomes a no-profit zone
Transition risk
Your company gets overwhelmed by an unforeseen change in technology or business model
Unique competitor risk
The sudden emergence of an especially powerful rival decimates your business
Stagnation risk
Your business achieves a level of maturity that makes further sales and profit growth very difficult
There’s no way to eliminate strategic risk altogether. But understanding it, mastering it, and implementing specific countermeasures allow your company to dramatically reduce the threats it faces. There are specific tools with which to build a shock-resistant business model.
