Risk Management Is the Greatest Benefit Offered Essay

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Risk management is the greatest benefit offered by a strategic, forward-thinking approach to management. In an uncertain economic environment, companies must constantly 'hedge their bets' as to what is the superior choice between mutually exclusive alternatives. Strategic management promotes the efficient use of resources by forcing companies to constantly anticipate the future, plan ahead, and make the best economic choices possible, given the company's current framework of knowledge. No company can predict everything that may happen but the consistent data-gathering that is required in a strategic management approach and trend-monitoring allows the company to be more flexible and responsive.

As well as avoiding bad decisions, effective strategic management also means knowing when to take advantage of possible opportunities and invest in good decisions. Risk management entails knowing when to take calculated risks, even if this means a major allocation of organizational resources, such as for a new form of technology or being a first-mover in a new international market. Knowing how to make trade-offs, when to commit and not to commit to an alternative requires a forward-thinking approach. Without strategic management, companies simply react -- often wastefully -- to the present moment, which results in missed opportunities and a failure to capitalize upon existing strengths. Resources must be used effectively to invest in growth. Operating in 'panic mode' in the absence of strategic management is financially and emotionally stressful for a company.

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Q2. As job growth continues to be sluggish, interest rates will continue to remain at historically low levels. Fed Chairman Ben Bernanke may make a token concession to worries about inflation and raise them slightly, but both the Obama Administration and most major economists believe that job growth must be a priority, and businesses and individuals must have the ability to borrow, spend money, and fuel the generation of more job-generating growth. However, the stock market has continued to do well, despite economic frustrations. The stock market and job growth do not necessarily improve concurrently. The stock market can be highly responsive to other economic signs, such as rumors and worries about particular industries and companies (such as the recent downturn of Apple stock in response to Steve Job's health worries), while unemployment and employment tends to be more 'sticky' and dependent upon real, economic factors like consumer demand. The stock market is highly sensitive assumptions about the future, as reflected economic data about consumer confidence, housing purchases, and other factors that can drive up -- or down -- the prices of stock.

The stock market is responsive to world events, while the Fed focuses on immediate domestic conditions more closely. The growth of multinationals may mean that stock prices may be trending upward, based upon global economic health, but some of the domestic factors that the Fed takes into consideration….....

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