Relationship between Strategy and Risks

This article explores the relationship between strategy and risks in organizations. It discusses the different types of risks, such as strategic, operational, reporting, and compliance risks, and how they can be managed through proper strategy. The article also provides real-world examples of successful projects and their strategies for managing risks.

Running head: RELATIONSHIP BETWEEN STRATEGY AND RISKS
Relationship between strategy and risks
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RELATIONSHIP BETWEEN STRATEGY AND RISKS
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Assessment of the risk:...........................................................................................................3
Relation between the organizational strategy and the risks:..................................................4
Making the relationship between risks and strategy in the organization:..............................7
Managing the positive risks through the strategy..................................................................8
Some real word examples of projects....................................................................................8
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Introduction
There are different projects needed to be carried out at different parts of the industry.
Apart from that there are certain tasks those are needed to be compiled without failure. In this
case, it has been seen that there are certain risks associated with the each project for the
different parts of the industry. However, the risks can be both positive and negative.
However, the managing of the risks can be managed through proper strategy (Epstein 2018).
Apart from that the business strategy can also be helpful for the managing the different
aspects of the projects and business. It has been seen that there is a connection between the
risks and the strategy. Management of the relationship between the strategy and the risk is
important for getting the proper outcome from the project as well as managing the
organizational goals. The main objective of this paper is to evaluate the connection between
the risks and the strategy and its significance for the development of the organization. In
order to do the evaluation the different aspects of the risks and strategy are needed to be
analysed. The conclusion is made on the factors found in the discussion of the paper.
Discussion
Risk: Risk can be defined as the unexpected events those can be occurred during the
development of the project in the organization. The risks can be both positive and negative.
The positive risks for the organization will indicate the scope or opportunities for the further
improvement in the organization. On the other hand the negative risks will raise the threats
for maintaining the functionality of the organization. It is the responsibility of the
organization or the project manager to manage the risks in a proper way.
The organizational risks can be defined as the potential loss or gain due to the raise of
the uncertain situation in the organization. The organizational risks are needed to be accessed
in a proper way. Apart from that the identification of the risk will help in the risk mitigation

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technique (Kırılmaz and Erol 2017). Apart from that this will also help in the decision
making and the areas for thee further improvements.
Managing the risks through strategy:
Running the business in the organization needs assessment of the risks. The risks
assessment follows certain process. It is the strategy of the organization to make the proper
risk assessment planning in the organization. It is the responsibility of the manger or the
management of the organization to identify the scopes and threats in the existing risk.
The analysis of the risk starts with the identification of the risks. After the
identification of the risks, assessment of the identified risk is carried out (Aubert, Kishore and
Iriyama 2015). The assessment of the risks includes qualify the magnitude of the risks and
quantification of the impact of the risks on the organization. After the assessments of the
risks, the priority of the risks is assigned on the basis of the risk impact on the organization.
Avoidance of the risks: The avoidance of the risk is a part of the risk mitigation
strategy. In this situation, the strategy is related with the risks in the organization. The
avoidance of the risks is related to the mitigation of the risks. The risks cannot be avoided in
any project. However, the mitigation of the risks is possible through maintaining the different
strategies in the organization. Risk avoidance is a part of the organizational strategy. There
are three possibilities according to the organizational strategy through which the risks can be
avoided. These three techniques are sharing of the risks, transfer of the risks and the
reduction of the risks.
Sharing the risks: The avoidance of the risks can be achieved through the sharing of
the risks. The risks can be shared between the different resources so that the impact of the
risks can be decreased.

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Transfer of the risks: The transfer of the risks is another strategy regarding the
avoidance of the risks. It has been seen that if the risks cannot be resolved, the risks can be
transferred to another entity or resources.
Reduction of the risks: The reduction of the risk is another strategy regarding the
mitigation of the risks. The elimination of the risks cannot be done entirely. In this case, the
impact of the risks can be mitigated. Through this the impact of the risk can be decreased.
Strategy: Strategy can be defined as the way or techniques through which the
functionality of the organization can be managed. Apart from that the strategy can be made so
that the organization can achieve the organizational goals.
The strategy is generally made by the higher authority of the management in the
organization. It has been seen that there is a connection between the strategy and risks in the
organization. The mitigation of the risks are also included in the strategy making of the
organization (Deresky 2017). In this case, the risk analysis is done through the strategy and
the process in the organization (Glaser, Stam and Takeuchi 2016). The mitigation of the risks
is also a part in the strategy for the organization.
Division of risks in organization
The relation between the organizational risks and the organization strategy can be
deployed from different perspective. It has been seen that there are different risks associated
with the organization. Some of the categorization of the risks are-
 Strategic Risks
 Operational Risks
 Reporting Risks
 Compliance Risk.

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Strategic Risks: There are certain strategic risks associated with the development of the
organization. Some of the strategic risks are- transactional risks, economic risks, political
risks, internal risks in the organization (Dandage, Mantha and Rane 2019). Apart from that
the technological risks are also associated with the strategic risks. The economic risks are
associated with the organizations. Sometimes the external situation in the business market
affects the situation and the progress of the business negatively (Kotula et al. 2018). It has
been seen that the change in the economic situation can be prompt. In this case, the
organization needs the quick response system to adopt the change in the process according to
the economic changes.
In case, if the strategy of the organization is not flexible enough for adopt the change in
the business process, there is chance that the expansion of the business may not be grown in
proper way (Teece et al. 2016). Apart from that the proper strategy is needed to be
implemented so that the changes in the economy can be carried out in a proper way.
Operational Risk: The operational risks involved the environmental risks, risks from the
innovation, risks from the health and safety, risks from the commencement of the project
(Rothaermel 2015). Apart from that risk associated with the human resource management and
reputational risks are also involved in the operational risks.
The organization has to be concerned about the safety of the equipment the employees
working in the organization. There is a probability of the miscommunication in the
organization. In this case the incidents related to the safety and the security of the employees
in the organization. Apart from that there are financial risks and environmental risks
(Wadström 2018). The financial risks are associated the profits and revenues in the
organization. It has been seen that the due to use of the resources in the organization, there
may raise the environmental risks (Ahmadi et al. 2016). The types of risks are associated

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with the environmental risks are use of resources which are not renewable in nature. Apart
from that the problems associated with the human resource management is also associated
with the operational risks (Venkatesh, Rathi and Patwa 2015). In case, if the turnover of the
employees is high, there is a risks that it will affect the production and the goodwill of the
organization. There is a risks associated with the projects in the organization regarding the
time and cost (Campbell and Reyes-Picknell 2015). These are all the operational risks which
can be mitigate through the application of the proper management and the business strategy.
Reporting risk: The reporting risks are associated with the information risks and the
reporting risks. The information risks can be raised due to the lack of communication in the
organization and the hierarchy in the organization. It has been seen the due to the lack of
communication there can be a problem regarding the assessment of the risks and the
cooperation between the employees and the management (Lundgren and McMakin 2018).
From this situation the increase of the potential physical risks of the company as well as the
organizational risks. In this case, the incident of the DeepWater Horizon oil spill case can be
mentioned. It has been seen that there was no proper risk management technique present in
the organization. Apart from that, there was lack of communication that raised the reporting
and the communication issues and the management was unaware about the poor condition of
the cement base.
Compliance risks: The compliance risks are the legal and the regulatory risks associated with
the organizational function. In case, if the business organization is operating in the other
countries, the organization may face problem regarding the business rules and regulations
(Tieman 2018). This can happen because the laws and regulations are different for different
countries. Apart from that the organization may face legal problem regarding the copyright
issues and other business operational issues in the organization (Mishra et al. 2016). These
can be considered as risks as these are worked as constraints for the development of the

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business. With the help of the proper business strategy the laws and regulations for the
different countries can be managed in a proper manner. In this context also the strategy is
necessary for the compilation of the business strategy.
Dependence between the risks and the strategy:
There are different tools and techniques those can be used for managing the
relationship between the risks and the strategy in the organization. For managing the business
strategy and the risks in the organization ERP system can be implemented (Marle and Vidal
2016). The risks can be accessed through the implementation of this enterprise resource tools.
Types of risk assessments: There are various type of risks associated with the business
process in the organization. In most of the cases, it has been seen that the organizations are
adopting the cloud storage for the better flexibility in the functionality (Murray and Ward
2018). There are the risks associated with the security in the technology. The risks are
associated can be regarding of the data breaching.
Apart from that there are risks associated with the implementation of the technology.
Moreover, there are risks associated with the human resource management. Due to the
implementation of the new technology the employees in the organization may feel threaten of
the uncertainty (Tappura and Pulkkinen 2019). In this context, the change in the management
process can be discussed from the organizational perspective. In order to manage the change
proper strategy is needed which is known as the change in the management process. In case,
if the change in the management is not implemented in a proper there is chance that the risks
can become a constraint for the development and the expansion of the business.
Strategy for managing the change in the process of the business organization: There
are some strategy for managing the change I the business process. The selection of the
strategy is different for managing the different change.

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Generally, it has been seen that due to the change in the process, the employees in the
organization supressed the change due to the uncertainty and the risks for losing the job.
These are reason most of the employees in the organization do not want the organization to
adopt the change.
In order to mitigate this problem the strategy of the cooperation and the increase of
the communication can be adopted. Through this strategy, the higher management can make
the employees in the organization make understand the necessity of change for both the
organization and the employees in the organization (Hung et al. 2015). Apart from that the
organization can adopt a strategy where it will provide proper training regarding the hand ling
of the new system for the employees in the organization. Apart from that the application of
different change management process tools and techniques can be implemented like
Mackinsey’s 7S framework.
Strategy and positive risks:
The positive risks are the risks those can help the organization to get the opportunities
for the further improvements. In this case, the risks can be treated strategically and those will
not be transferred to the other entities in the organization. As for example, it can be said, an
organization is doing well in the market. However, it has been seen that other companies are
also using the advanced technology for maintaining the functionalities in the organization. In
this case, the previous company can and analyse the need for the adaptation of the new
technology for their functionalities. The whole adaptation process can be defined as the
utilization of the positive risks in the organization.
Some real word examples of projects
Some of the real world examples of the successful project includes the
implementation of the better health care management in Simens. This organization has to

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maintain 100+ types of project. Earlier SharePoint was used or maintaining the sites and the
lists. The organization has successfully implemented BrightWork for managing the lists and
the sites (Kırılmaz and Erol 2017). While implementation of the new system in the
organization, Simens has faced some risk and challenges such as providing proper training to
the employees in the organization and maintaining the implemented system in a proper way.
On the other hand the successful project will follow the right strategy to mitigate the
possible risks those can be occurred during the development of the project. In this context,
the digital disruption of the American airlines during the change can be mentioned. The
American airlines has taken some of the bold steps for the digital disruption (Tappura and
Pulkkinen 2019). Implementing the new technology in case of digital disruption has certain
risks. However, the American airlines has successfully implemented the digital disruption
along with proper risk assessment through right strategy.
Conclusion
The discussion is regarding the stating of the relationship between the risks and the
strategy in the organization. It has been seen that there are two types of the risks in the
organization-positive and the negative risks. The negative risks brings the constraint in the
organizational development. Through the implementation of the right strategy the impact of
the negative risks can be mitigated. Apart from that, it has been that the presence of the
positive energy will bring the opportunities and the scope for the organization. There is a
strategy for the managing the positive risks in the organization which will lead the
organization to explore the opportunities available in the market. It can be said from the
above discussion that there are both positive and the negative threats. The merging of the
strategy can be done in this stage so that the exploration of the both positive and negative
threats can be done in a proper way.

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