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Risky Business


Readers Report

RISKY BUSINESS

Congratulations on your well-researched "Managing Risk" (Special Report, Oct. 31).

As someone who has worked with a number of multinationals in currency risk, I would offer two caveats for companies seeking to upgrade risk-management efforts. First, while risk management is best treated on a companywide basis, do not merely delegate responsibility for this to the treasurer's department. If you don't train operating managers to understand and evaluate risk, they will continue to develop strategies that generate unwanted exposure.

Second, always think about risk and reward simultaneously. Most of your interviewees had a lot to say about controls and limits, but few mentioned business opportunities.

Overzealous controls can destroy the entrepreneurial spirit of an organization. Don't let the cure result in over-centralization and a "police state." That would destroy more shareholder value than surprises or ill-understood risks.

Stephen A. Allen, Professor of

Management & International

Business

Babson College

Babson Park, Mass.


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