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What makes us think of risks? Is it backward thinking or forward thinking?
Will it allow us to grow and progress or slow us down? Such questions confront us when we think of risk management. In growth-oriented management cultures of the past, negative aspects were not mentioned. The drive was to reach out and move ahead. In those days, to reflect upon failure was a sign of weakness. The entrepreneur was a go-getter who crossed all barriers and achieved. Thinking about failure came into management paradigms through different avenues. First, the market demanded fail-safe products. The product developer was forced to look at failure possibilities and come up with a robust design. He struggled to remove what we refer to today as “product risks.” The discipline of technology management accepted risk thinking rather elegantly. It made sense to product developers to design a product with minimum risks for the user. The success of risk management in product development also fuelled technological progress and expansion. To identify product risks, a fuller and more mature technical knowledge was required. It was not a smooth beginning. Although designers enjoyed the creative
pleasures and excitement of design, they disliked risk analysis of their products. In due course, product risk analysis was accepted by the industry. Second, for finance management, risk became an investment question. Credit risk was studied, defined, and measured religiously in finance institutions. Variation in ROI was a measure of risk, striking a sympathetic chord with the age-old concept that “variation is trouble.
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