Risk and Uncertainty



Risk and Uncertainty

Question 1:

Today there is much more risk and uncertainty in the business world and in all general areas that had never been before, the speed with which changes occur and the magnitude of the events that occur worldwide are greater than ever. Some say this is the new normal. Therefore, in these situations we need new visions, new perspectives, a new system. Business leaders need a useful tool that allows them to navigate and steer their business in order to have a greater margin of certainty in this new system of chaos (Globerman, 2012). They need something like chaos management system.

The international business environment has been highly uncertain. Managers may feel that they may have all the past data, market and demographic conditions and the political conditions in the region, but forecasts based on such data can prove to be highly inaccurate. The alterations in the business environment can prove to be a negative or a positive factor for a company. The uncertain profitability ratio of the company can pose as a risk for not only the shareholders, but also the shareholders as well. Historically, uncertainty and risk analysis as a business tool has had a limited use. Management needs to consider the value of the risk involved in any given project before accepting any project. An example can be quoted here of the acquisition of the Lehman Group by the Nomura Holdings Inc., a Japanese investment banking firm. Normura had no prior experience of working in the U.S.; hence they face numerous problems with the existing employees of Lehman. The female bankers that were hired by the Lehman corp. had complained the stricter dress codes and the change in their emailing address from the maiden names to their maiden names without prior consensus. The male ...