The management of risk is, essentially, the strategy for surviving and thriving in a volatile, uncertain, complex, and ambiguous world. Prior to the industrial revolution and the advanced communication age, decisions could be made easily using heuristics or “gut level feel” based on past experience. As long as the world faced by the decision maker was more or less the same as that faced yesterday, gut level decision making worked fairly well. The consequences of failure were concentrated in small locations. Entire villages were extinguished due to lack of crop risk planning or diseases. There were no systemic contagious interlocking risks, such as those that brought the financial markets to their knees worldwide in 2008–2009.
Today the stakes are higher; the decision making is more complex, and consequences more severe, global, and fundamental. Risk managers have become part of executive teams with titles, such as chief risk officer (CRO), and are empowered to bridge across all business activities with short-term, long-term, and far-reaching goals. The credit crisis revealed that lack of understanding of risks, and their combined and correlated ramifications has far-reaching consequences worldwide. The study of risk management is designed to give business stakeholders the weapons necessary to foresee and combat potential calamities both internal to the business and external to society overall. The “green movement” is an important risk management focus.