Discover the interplay between strategy and risk in this insightful new resource from two experts in the financial industry who have applied their knowledge to multiple industries In The Two Headed Coin, accomplished authors James L. Darroch and David Wm. Finnie deliver an insightful exploration of the interplay between strategy and risk that underlies the operational framework of successful organizations. You'll learn which risks are fundamental to the strategic positioning and goals of your organization and which are not. You'll also discover the importance of an independent risk function, e,g., the CRO, and its invaluable role as part of the strategic process. You'll also find: A thorough discussion of the notion of competitive advantage and how it relates to risk An exploration of consumer perception and reputation as an asset to be managed How to use scenario planning and real options to provide a framework for managing uncertainty How a focus on culture and ethics can minimize the risk of large losses due to adverse behaviors Perfect for risk management and strategy professionals The Two Headed Coin will also earn a place in the libraries of executives and managers who wish to improve their ability to integrate strategic and risk thinking to create competitive advantage.

Table of Contents:
Preface: Risk is Good and Uncertainty is the Reality! xi Acknowledgments xxv About the Authors xxix Chapter 1 Strategy and Risk: Two Sides of the Same Coin 1 Strategic Positioning and Risk 6 Strategy and Risk in a Start-Up 7 Chapter 2 Executing on the Plan and Discovering New Risks 17 The Assumption of Goal Congruence and the Importance of Culture 21 Conclusion 27 Chapter 3 Which Risks to Keep 31 Strategic Positioning and Risk Governance 38 How Does Risk Management Help Close the Gap Between Strategy Formulation and Execution? 40 Conclusion: Embracing and Managing Risk 42 Chapter 4 How Do We Achieve Independent Risk Governance and Improve Performance? 47 What Do We Mean by ERM? 51 Chapter 5 Who Has the Specific Knowledge to Design the Risk Architecture? Why You Need an Independent Risk Function 61 The Strategy-Risk-Governance Process 61 Meeting the Objective and the Categorization of Risks 69 The Risk Architecture 71 Creation of a Risk Function 73 Conclusion 76 Chapter 6 Enterprise Risk Management and Competitive Advantage 79 How Does Strategy Affect Randomness? 86 Chapter 7 What Reputation Do We Want? With Whom? 91 Managing Reputation Risk 99 Chapter 8 Uncertainty, Scenario Planning, and Real Options 105 Real Options 113 Conclusion 116 Chapter 9 Risk Culture and Ethics: Can You Have Excellence and Consistency at the Same Time? 121 The Advisor-Customer Encounter 124 Control Systems, Discretion, and Ethics 127 Culture, Ethics, Performance, and Risk Management 135 Chapter 10 The Top of the Pyramid: The CEO as Integrator of Strategy and Risk and the Board as the Fourth Line of Defense 141 The CEO: The Operational Integration of Strategy and Risk 145 The Board: The Governance Integration of Strategy and Risk 145 The Board Provides More Than Oversight 146 Epilogue: Decision-Making at the Restaurant: Creating and Executing a Risk-Aware Strategy 151 Appendix I: Risk Transformation and the Need for an Integrated Risk Approach 157 Appendix II: Resiliency 161 Bibliography 167 Index 183