Question

“[M]anagement take risks … but the processes that generate those … are somewhat removed from the classical processes of choosing from alternative actions in terms of expected value”.

Discuss this statement in 500 words

Answer 1

Ans :

Managerial risk taking is a critical aspect of strategic management. Strategic management is nothing but identifying organizations goals and planning things to accomplish them. When we talk about risk we can define it in terms of economic assumption which says that if the expected value of two strategies is similar but amongst them one is uncertain one than the management is likely to go for the certain one option. These theory states that though management takes risk in business which is an inherent part of it still when it comes to outcome the risks involved are kept aside or removed from the road towards attaining the desired results. Managerial risk taking and uncertainty are two elements which go hand in hand. But when the uncertainty is identified and it is found that it can be removed the action plan for it is made. Risks can be classified as controllable and uncontrollable risk. The ones which are identified and can be controlled are always removed to attain better results with less risks.