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The Risk Exposure Calculator
can be used to gauge a company's likelihood
at being surprised by errors or breakdowns -
in other words being surprised by disaster.
Using the calculator is straightforward. For
each item, rate the level of pressure in your
company, scoring 1 as low and 5 as high. The
total score shown in the results determines
which zone your company is in.
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- Pressure for performance
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- Rate of expansion
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- Inexperience of key employees
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GROWTH TOTAL
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- Rewards for entrepreneurial
risk taking
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- Executive resistance to bad
news
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- Level of internal competition
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CULTURE TOTAL
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- Transaction complexity and
velocity
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- Gaps in diagnostic performance
measures
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- Degree of decentralised decision
making
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INFORMATION MANAGEMENT TOTAL
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9
to 20 |
The Safety Zone
Companies that
carry this low level of
risk are probably safe from
unexpected errors or events
that could threaten the
health of the business.
However, managers of such
companies should question
whether their risk exposure
score is too low. Innovative,
successful companies invariably
create risk pressure. If
your business scores in
the safety zone, perhaps
it's time to take some calculated
gambles.
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21
to 34 |
The Caution Zone
Most companies
will find that they fall
in this middle zone. But
even here, managers should
be alert for high scores
in any two of the three
risk dimensions. For example,
if your business scores
high on both growth and
culture, but the total score
falls below 35, there is
still reason for concern.
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35
to 45 |
The Danger Zone
If you find that
your total score is 35 or
above, alarm bells should
be ringing and fast action
should follow. Use the levers
of control: belief systems,
boundary systems, diagnostic
control systems, and interactive
control systems - coupled
with traditional internal
controls - to protect your
business from disaster.
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| Acknowledgements:
Harvard Business Review
May/June 1999, pp. 85 -
94. Article by Robert Simons
and Charles M. Williams,
Professor of Business and
Administration and a director
of research at Harvard Business
School in Boston, MA. |
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| Important: The results from this calculator should be used as a guide only, and it is strongly advised that you should consult an experienced or qualified accountant or financial/business adviser before making any decisions.
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