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The Risks of Risk Management

  • Ian I Mitroff
  • Can M. Alpaslan
Chapter
  • 86 Downloads

Abstract

This chapter compares and contrasts Risk Management (RM) with Crisis Management (CM). RM aims to calculate the expected damage that crises inflict. To do this, RM multiplies the likelihood of a crisis by its consequences measured in dollars, injuries, and so on. It then ranks crises in terms of their expected damage, and ignores crises that are below a certain cut-off level. Inevitably, RM neglects disasters that are extremely low in probability but high in consequences such as 9/11. CM acknowledges not only the existence of deep assumptions that prevent serious planning for crises, but surfaces such assumptions so that we can confront and overcome them. For CM, the least likely crises are precisely the ones that are most likely to do the worst damage. In effect, CM is the Management of Key Assumptions.

Keywords

Risk Management Crisis Management Critical Assumption Painful Event Expected Damage 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Ian I. Mitroff and Can M. Alpaslan 2014

Authors and Affiliations

  • Ian I Mitroff
    • 1
  • Can M. Alpaslan
    • 2
  1. 1.Center for Catastrophic Risk Management, Haas School of BusinessUniversity of CaliforniaBerkeleyUSA
  2. 2.Department of ManagementCalifornia State UniversityNorthridgeUSA

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