• Understand different views on risk management practice
• Analyze strategic exposures and develop appropriate responses
• Critique contemporary approaches to corporate risk management
• Consider ways to deal with uncertainty and complex outcomes
• Develop effective risk management approaches

Introduction
The business environment is becoming increasingly turbulent and makes future competitive conditions very hard to predict. Ongoing product and process innovations change the way business is conducted, environmental hazards expose the economic infrastructure and political turmoil around the globe affects market conditions with prices as volatile and erratic as ever. Multinational firms faced with these dynamic and complex circumstances must develop effective strategic response capabilities to survive and thrive. This challenge goes well beyond the ability to monitor, control, hedge, and prepare for potential contingencies and crisis. The true exposures often relate to operational, competitive and strategic factors that are difficult to quantify and foresee. Unexpected things happen from time to time and organizations must be able to deal with these situations.
 

Purpose
This course provides a general overview of different exposures faced by contemporary organizations engaged in global business activities and considers how the underlying risks and uncertainties can be managed. The risk management topic is perceived from different academic perspectives including quantitative techniques in finance and insurance as well as general analytical frameworks adopted in engineering, accounting, management and strategy. While these approaches can help our dealing with identifiable events, they cannot address the unexpected situations that are hard to foresee. Therefore, we consider entrepreneurial behaviour and proactive risk-taking as necessary prerequisites for effective adaptation where firms explore the upside potential of emerging risk opportunities to create sustainable competitive advantage. This approach hinges upon particular leadership approaches that enhance risk awareness and set up responsive decision-making processes supported by open communication and challenges these in view of alternative innovation management approaches and organizational structures that facilitate creative responses to new circumstances as a necessary prerequisite for adaptation in contemporary organizations.

Readings
The course material may comprise two recent books, a collection of professional and academic articles, current policy studies and working papers.
Andersen, T. J., Garvey, M. and Roggi, O., Managing Risk and Opportunity: The Governance of Strategic Risk-Taking, Oxford University Press, Oxford, England, 2014. (ISBN: 978-0-19-968785-5)
Andersen, T. J. and Schrøder, P. W., Strategic Risk Management Practice: How to Deal Effectively with Major Corporate Exposures, Cambridge University Press, Cambridge, England, 2010. (ISBN: 978-0-521-13215-2)
Relevant articles, policy papers, and case examples will be available on the course site.
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COURSE SCHEDULE AND READINGS:
Strategic Risk Management of Multinational Enterprise – Fall 2017
Note: Adjustments to the assigned readings may occur (The readings are listed in alphabetical order for each session)

The course will be structured around 11 three-lecture class sessions (one session per week) during the fall semester in weeks 36, 37, 38, 39, 40, 41, 43, 44, 45, 46, 47.
All course activities including the exam are conducted in English.
Readings

1. Essential Risk Management Concerns
Content: The concepts of risk, uncertainty, and change are introduced in the context of multinational organizations and the relevance of strategic responsiveness is discussed. Readings:
o Andersen, T.J. and Schrøder, P. W. 2010. Chapter 1 in Strategic Risk Management Practice, Cambridge University Press.
o Power, M. 2005. ‘The Invention of Operational Risk’, Review of International Political Economy, 12(4), pp. 577-599.
o Slywotzky, A. J. and Drzik, J., 2005. ‘Countering the Biggest Risk of All’, Harvard Business Review, 82, pp. 78-88.
Case: KN Energy, Inc. (A)
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2. Multinational Market Exposures
Content: We identify potential international risk factors in multinational risk management and consider alternative business responses to deal with them.
Readings:
o Andersen, T.J. and Schrøder, P. W. 2010. Chapter 2 in Strategic Risk Management Practice, Cambridge University Press.
o Andersen, T. J., 2006. ‘A Multinational Risk Management Framework’, Chapter 7 in Perspectives on Strategic Risk Management, CBS Press, pp. 131-146.
o Ghoshal, S., 1987. ‘Global Strategy: An Organizing Framework’, Strategic Management Journal, 8, pp. 425-440.
o Miller, K. D., 1992. ’A Framework for Integrated Risk Management in International Business’, Journal of International Business, pp. 311-331.
Case: Nissan Motor Company Ltd.
3. Real Options Reasoning
Content: We consider the conventional financial option perspective and extend this to real options that can address business and corporate exposures.
o Andersen, T.J. and Schrøder, P. W. 2010. Chapter 4 in Strategic Risk Management Practice, Cambridge University Press.
o Andersen, T. J., 2006. ‘Strategic Exposures and Real Options’, Chapter 10 in Global Derivatives: A Strategic Risk Management Perspective, Pearson Education, pp. 357-396.
o Leuhrman, T. A. 1998. Strategy as a Portfolio of Real Options, Harvard Business Review, 76(5), pp. 89-99.
o Miller, K. D. and Waller, H. G., 2003. ‘Scenarios, Real Options and Integrated Risk Management’, Long Range Planning, 36, pp. 93-107.
Case: Samsung
4. Global Operating Structures
Content: The multinational corporation sources inputs and distributes goods and services on a global scale where a flexible operating structure enhances the ability to deal with external events.
o Andersen, T.J. and Schrøder, P. W. 2010. Chapter 5 and 6 in Strategic Risk Management Practice, Cambridge University Press.
o Christopher, M. and Peck, H., 2004. ‘Building the Resilient Supply Chain’, International Journal of Logistics Management, 15(2), pp. 1-13.
o Kogut, B. and Kulatilaka, N. 1994. ‘Operating Flexibility, Global Manufacturing, and Option Value of a Multinational Network’, Management Science, 40(1), pp. 123-139.
o Manuj, I. and Mentzer, J. T., 2008. ‘Global Supply Chain Risk Management Strategies, International Journal of Physical Distribution & Logistics Management, 38(3), pp. 192-223.
Practice: PwC and the MIT Form for Supply Chain Innovation: Making the right risk decisions to strengthen operations performance
Case: Can LEGO Snap Together a Future in Asia? (HBS Working Knowledge - online)
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5. The Governance of Risk Management
Content: The multinational risk management process is a function of the governance structure imposed on the organization – we review the core arguments for contemporary guidelines.
Readings:
o Andersen, T. J., Garvey, M. and Roggi, O. 2014. Chapter 1 in Managing Risk and Opportunity, Oxford University Press.
o Ashbaugh-Skaife, H., Collins, W., Kinney, W. R. and Lafond, R. 2009. ‚‘The Effect of SOX Internal Control Deficiencies on Firm Risk and Cost of Equity‘, Journal of Accounting Research, 47(1), pp. 1-43.
o Bargeron, L., Lehn, K. M. and Zutter, C. J., 2010. ‚Sarbanes-Oxley and Corporate Risk-Taking’, Journal of Accounting and Economics, 49, pp. 34-52.
o Basel Committee on Banking Supervision (2015). Guidelines: Corporate Governance Principles for Bank, Bank For International Settlements, Basel: Switzerland [available on-line]
o The RiskMinds 2009 Risk Managers’ Survey: The Causes and Implications of the 2008 Banking Crisis.
Case: Lehman Brothers (A)
6. Enterprise Risk Management Rationales
Content: We extend the discussion of enterprise risk management and its applications and consider different rationales in support of the risk management concept.
Readings:
o Andersen, T. J., Garvey, M. and Roggi, O. 2014. Chapter 2 in Managing Risk and Opportunity, Oxford University Press.
o Froot, K. A., Scharfstein, D. S., and Stein, J. C., ‘A Framework for Risk Management”, Harvard Business Review, 1994, 76(6), pp. 91-102.
o Merton, R. C., ‘You Have More Capital Than You Think’, Harvard Business Review, 83(11), pp. 84-94. o Nocco, B. W. and Stulz, R. M. 2006. ‘Enterprise Risk Management’, Journal of Applied Corporate Finance, 18(4), 8-20.
o Pagach, D. and Warr, R. 2011. ‘The Characteristics of Firms That Hire Chief Risk Officers’, The Journal of Risk and Insurance 78(1), 185-211.
Practice: Risk Management Frameworks (COSO, ISO 31000, IRM).
7. Strategic Risk Management Practice
Content: We discuss how effective risk management in a multinational organization constitutes a combination of managed risk awareness and prudent risk-taking behaviour.
Readings:
o Andersen, T. J., Garvey, M. and Roggi, O. 2014. Chapter 4 in Managing Risk and Opportunity, Oxford University Press.
o Andersen, T. J. and Læssøe, H. 2014. Effective Strategic Risk Management Practice: Responding Faster to Updated Information (working paper).
o Frigo, M. L. and Læssøe, H. 2012. ‘Strategic Risk Management at the LEGO Group’, Strategic Finance, February, pp. 27-35.
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Executive visit: Hans Læssøe, Senior Director, Strategic Risk Management, The LEGO Group.
Case: LEGO – RIMS Risk Management Challenge
8. The Challenges of Enterprise Risk Management
Content: In this session we discuss organizational challenges of conventional enterprise-wise risk management practices and consider possible alternatives.
Readings:
o Andersen, T.J. and Schrøder, P. W. 2010. Chapter 6 and 7 in Strategic Risk Management Practice, Cambridge University Press.
o European Organisation for the Safety of Air Navigation, 2006. Eurocontrol Experimental Centre: Revisiting the “Swiss Cheese” Model of Accidents, EEC Note No. 13/06.
o Schoemaker, P. J. H. and Day, G. S. 2009. ‘How to Make Sense of Weak Signals, MIT-Sloan Management Review, 50(3), 81-89.
o Vaughan, D. 2005. ‘System Effects: On Slippery Slopes, Repeating Negative Patterns, and Learning From Mistake?’, Chapter 3 in Starbuck, W. H. and Farjoun, M. (eds.), Organization at the Limit: Lessons from the Columbia Disaster, Blackwell Publishing, Malden, MA, pp. 41-59.
Case: TEPCO and the Fukushima Daiichi nuclear power plant
9. Aspects of Proactive Risk Management
Content: We discuss how current risk management practices may fail to adapt to unexpected risks and consider proactive multinational risk management approaches to deal with this.
Readings:
o Andersen, T.J. and Schrøder, P. W. 2010. Chapter 8 in Strategic Risk Management Practice, Cambridge University Press.
o Andersen, T. J., 2012. ‘Multinational Risk and Performance Outcomes: Effects of Knowledge Intensity and Industry Context’, International Business Review, 21, pp. 239-252.
o Andersen, T. J., 2009. ‘Effective Risk Management Outcomes: Exploring Effects of Innovation and Capital Structure’, Journal of Strategy and Management, 2(4), pp. 352-379. o Damodaran, A. 2008. ‘Strategic Risk Management’, Chapter 11 in Strategic Risk Taking: A Framework of Risk Management, Wharton School Publishing, 341-365.
o Torp, S. (2016). ’Effective Risk Management: Do We Have the Right Management Skills and Employee Competences?’ in Andersen, T. J. (ed.) Routledge Companion to Strategic Risk Management.
Case: Disaster Recovery Testing (DiRT) in Google.
10. Cognitive Biases in Risk Management
Content: In this session we will consider how the individual cognition of key decision makers can create its own exposure by inducing biases and discuss possible remedies.
Readings:
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o Andersen, T.J. and Schrøder, P. W. 2010. Chapter 9 in Strategic Risk Management Practice, Cambridge University Press.
o Mitroff I. I. and Silvers, A. 2010. ‘Screwing Up Royally - An Introduction to Errors of the Third and Fourth Kind’, Chapter 1 in Dirty Rotten Strategies: How We Trick Ourselves and Others Into Solving the Wrong Problems Precisely, Stanford Business Books, 1-28.
o Weick, K. E. and Sutcliffe, K. M. 2001. ‘What Business can Learn from High Reliability Organizations’, Chapter 1 in Managing the Unexpected, Jossey-Bass, San Francisco, pp. 1-23.
Case: Porsche (A) (European Case Clearing Corporation #310-267-1)
11. Strategic Risk Management - Overview
Content: The basic course content is revisited and contextualized. The final completion of the written exam reports (term papers) can be discussed.
Readings:
o Andersen, T. J., Garvey, M. and Roggi, O. 2014. Chapter 5 in Managing Risk and Opportunity, Oxford University Press.
o Miller, K. D., 2009. ‘Organizational Risk after Modernism’, Organization Studies, 30(2), pp. 157-180.
o Power, M. 2009. ‘The Risk Management of Nothing’, Accounting, Organizations and Society (34), 849-855.
Case: British Petroleum: From Texas City to the Gulf of Mexico and Beyond
The Written Report (final exam) is due no later than (to be determined)