35 years: Strategic risk management and governance
In this video, Hans-Kristian looks at risk-based decision-making, exploring how corporates can make better investment and capital allocation decisions in a complex and unpredictable world. He also focuses on the role of the business case and how corporates can improve it to ensure that capital is allocated to the opportunities that are most likely to generate the greatest value.
In this video, Hans-Kristian looks at risk-based decision-making, exploring how corporates can make better investment and capital allocation decisions in a complex and unpredictable world. He also focuses on the role of the business case and how corporates can improve it to ensure that capital is allocated to the opportunities that are most likely to generate the greatest value.
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15 mins 57 secs
In many organisations, decisions are made on the basis of a single number such as Net Present Value or Internal Rate of Return. Questions about how value could be eroded are often relegated to the back pages of appendices to the business case. This leads to the question of whether value enhancement is being balanced with a realistic assessment of the risks.
Key learning objectives:
Understand what risk-based decision-making is
Outline how corporates can make better investment decisions
Understand the role of business case and how corporates can improve
This content is also available as part of a premium, accredited video course. Sign up for a 14-day trial to watch for free.
Risk-based decision-making is the process of taking a decision that is built on the combination of both the expected returns and the associated risks, with the decision being made based on the returns adjusted for these risks. We recognise that this can incorporate qualitative, quantitative or indeed hybrid models, and can take a number of different approaches depending on the particular case.
A business case is a formal or informal process for describing a potential investment in terms of the objectives, projected returns and value that is expected to be created. It is likely to be a combination of narrative descriptions and financial projections which underpin the go/no-go decision.
This content is also available as part of a premium, accredited video course. Sign up for a 14-day trial to watch for free.