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Is it Riskier to Avoid Risk?

The Economist Risk Summit and its implications for business school students

By  Samuel Hargadine

Fri Nov 19 2010

Risk is everywhere. It is what forces people to make decisions. It is why many of’s readers choose to go to business school – the planned reward for jumping at an opportunity.

Not all decisions lead to such rewards. Some paths are safer than others (e.g. the choice of investing in your education rather than investing your current earnings in increasingly unstable Irish bonds).

This was the theme of the 2010 Economist Risk Summit. At the conference, the stage provided a setting for debate between entrepreneurs, innovators, risk specialists, and economists in order to map out risk and determine the changing role it has on our personal lives. Additionally the summit tried to pinpoint an outlook for businesses and governments in the short, as well as, long-term.

Speakers included, Rita Clifton of Interbrand, Bilal Kaafarani of Coca-Cola, David Rowan of WIRED magazine, Hagan Lindstädt of Karlsruhe University, Tom Hulme of IDEO, and Professor Andrew Kakabadse and Stephen Carver of the Cranfield School of Management, among many others.

Stand out sessions included the debate Cranfield’s Andrew Kakabadse participated in – placing blame for the current economic crisis on the structure of how businesses across the world are organized. Kakabadse states that, “85 percent of directors can’t say what the competitive advantage of their company is.”

He goes on to postulate that risk officers do not want to handle the politics of their organization. That they “need to get their message through more effectively.” “The risk officer is just a fall guy unless there is political reform within boards and in how they make decisions.”

Another interesting session included the briefing on how business is changing. In reference to the prospects of social media, David Rowan from WIRED said, “in the future marketing will be like sex, only the unattractive will have to pay for it.”

The Economist Intelligence Unit (EIU) also held a session where they outlined both economic and political risk in the world today. Unusually, it appears that the map of where there is significant risk of political collapse is very different from where there is economic risk.

The EIU stated that, “we think Ireland will default, but the Euro zone will survive.” They went on to predict that there is a “35 percent chance for inflation to get out of hand in China.”

These factors and others presented at the Risk Summit were illuminating, especially in reference to the world of risk we live in today. Surely it should be a factor in what industries and specializations future business students go into. One thing is for sure though: risk is where opportunity meets reward and we should all remember that.