Risky Business: Managing in a world with extreme exposures

Abstract:

Organizations in the global economy are exposed to extreme events including fiscal crisis, cyber attack, social instability, governance failure, extreme weather, etc. But,only a few of them are able to adjust and thrive against these odds while many fail.It is consistently noted that some firms can outperform and display favorable risk return outcomes for some time whereas a vast number of firms fall into an extreme left-skewed tail of poor returns. Yet, we are unable to explain this regularly observed empirical phenomenon, which is overlooked in mainstream management research. Hence, the project will uncover the dynamic adaptation processes where only a few firms are able to adjust and thrive while most are not. The insights from the study can inform executive decision-makers and help them avoid extreme downside losses and thrive on opportunities thereby extending the value-creating potential of the organizations in an international economy exposed to large exogenous risks.