The article introduces a strategic model for thinking about risk and how it is affected by the time continuum of the organization. Managers often spend so much time dealing with the significant risks in the present that they find it difficult to deal with risk in a longer time horizon. On the other hand, if we do not have some resources devoted to dredging the swamp, the alligators will never go away. We have developed a new thinking model for addressing business risk and business opportunity over multiple time horizons. Using this model, organizations have begun to reshape their planning and control systems to be more effective in supporting the organization's goals and objectives.
Managers put assets at risk to achieve objectives.
This relationship is a fundamental planning problem for managers. Managers must plan, organize, direct, and control the optimum mix of assets to achieve their objectives given the risks that are present. It is not enough to assemble the right stuff to do the job, managers also must consider how risks will affect the assets. The assets can include human resources, intellectual property, intangible good will, as well as the more usual financial and physical assets. Structured planning is an effective internal control system.