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Risk as strategy: defending against catastrophic turns of fortune

Strategy & Leadership

ISSN: 1087-8572

Article publication date: 5 June 2020

Issue publication date: 24 July 2020




The author offers executives a strategic process for proactively mitigating the risk of catastrophic unwanted Black Swan surprises that can severely, and often abruptly, impair a balance sheet.


One practical way to apply the author’s approach is through hedging concentrated balance sheet exposures when market volatility is low or contracting.


Though no one can reliably anticipate pandemics and related stock market turbulence, executives do not have to predict the future to economically protect their balance sheets from Black Swan events.

Practical implications

Managers can construct Black Swan scenarios to assess how an unforeseen, disadvantageous future could develop and which risk management derivative would best mitigate it.


This strategic approach to managing balance-sheet-threatening risks could help a firm outperform its competitors during future crises and catastrophes.


Calandro Jr., J. (2020), "Risk as strategy: defending against catastrophic turns of fortune", Strategy & Leadership, Vol. 48 No. 4, pp. 29-35.



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