Professor Forman

1.1 Progressing from Issue Management to Risk Management

If you would like to progress from just talking about risk to managing risk in a comprehensive, collaborative, and scientific way, throughout an enterprise, then this article is for you.  Decision making is a big part of management and good decision making requires analytics.  The three categories of business analytics[1] are descriptive, predictive, and prescriptive. Most organizations trying to do enterprise risk management today utilize only descriptive analytics — managing risk issues that have occurred in the past and failing to address future risk events.  Managing issues and not risks is shortsighted because risk is about the future – about uncertain events that matter.  But there is no data for the future! This article will explain and illustrate how prescriptive analytics for making risk decisions in an optimal and defensible way can be accomplished using predictive analytics – measurement and estimation methods that, while not necessarily precise, are surprisingly accurate and effective.


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