You can be richly rewarded for
managing risk. A recently published study by the University of
Southern California delivers impressive proof.
The 20-year study compared the economic performance of companies
that
proactively
managed risk and crises against those that did not. The proactive
group recently returned 100 percent higher Return On Assets and
suffered 60 percent fewer crises than their “crises-prone” counterparts.
The study shows
that keeping your primary resources focused on innovation and
improving customer relationships should be your objective, too.
The Center for Crisis Management at USC has recently published
important conclusions from a 20-year study
of the Fortune 500. The study was conducted by on-site audits and
focused on preparation for managing potential crises. According
to their levels of preparedness, companies were categorized as
proactive
(crisis-prepared) or reactive (crisis-prone). Facts:
-
Between 1998
and 2001 the proactives faced 60% fewer crises than the
reactives.
-
Proactives stayed in business 24% longer
than reactives.
-
In 2001 proactives returned 100% higher
Return On Assets than reactives.
Portions of the study were
published in the Harvard Business Review, April, 2003,
by Ian I. Mitroff
and Murat C. Alpaslan.
Mr. Mitroff is associated with the Marshall School
of Business (the Harold Quinton Distinguished
Professor of Business Policy),
a professor
of journalism at the Annenberg School of Communication
at USC and the director of the Center for
Strategic Public Relations
at University of Southern California, Los Angeles.
He has published 22 books, the latest of which is Crisis
Leadership: Planning for the Unthinkable (John
Wiley, 2003).
Mr. Alpaslan holds a doctoral degree from the
Marshall School of Business.
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