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Basel III regulations require banks to protect themselves against strategic risk. This paper aims to provide a comprehensive and measurable definition of this risk and proposes a framework to estimate economic capital requirements.

The paper studies the literature and solicits expert opinion in formulating a comprehensive and measurable definition of strategic risk. The paper postulates that the economic capital for a bank’s strategic risk should be estimated using the cost of equity as the profitability threshold, rather than zero and develops a simulation-based framework to estimate economic capital.

The framework closely matches the actual economic capital outlay for strategic risk from our case study of ABN AMRO. It is shown that a bank’s strategic growth plans can fall into one of two scenarios based on risk-return characteristics. In one scenario, the required economic capital outlay will increase, and decrease in the other.

This framework is generalizable and makes use of widely accepted and used practices in banks, making it readily implementable in practice. It does not introduce errors resulting from model selection, parameterizations or complex calculations.

Society would be worse off in the absence of banking and lending services. Banks need to take risks to grow and stay competitive. The framework facilitates better strategic risk management, protecting banks from collapse and reducing the need for taxpayer-funded bailouts.

The paper provides a measurable and practitioner-verified definition of strategic risk and proposes a simple framework to estimate economic capital requirements, a crucial topic, given the threats and increased levels of strategic risk facing banks.

Public-private partnerships (PPPs) are characterised by contracts which are necessarily incomplete due to the complexity of their contractual specifications for the contracted services combined with the long-term legal obligations they create. This creates high transaction costs including sharing (and so bearing) risks. The purpose of this paper is to investigate the link between risk sharing and governance, providing a new perspective for analysis with less emphasis on transaction costs and more on PPPs as strategic alliances.

Three main issues are analysed. First, the definition of PPP in terms of both the type of arrangements and the actors involved, structures varying from one country to another and between contracts. Second, the definition of strategic alliance, identifying which form(s) of PPP is a strategic partnership. Third, reconsideration of incomplete contract theory to identify the circumstances where a strategic alliance can accommodate high transaction costs.

The paper concludes that establishing PPPs as strategic alliances could rectify problems of incomplete contracts by implementing a multidimensional (rather than technocratic) approach to risk governance.

The contribution to knowledge provided by this study is rooted in the conceptualization of PPPs as strategic alliances by distinguishing the tangible characteristics of strategic alliance related to the letter of the contract from the intangible characteristics related to the spirit of the contract with the main purpose being to create both public and private value.

Presents a model for analyzing the potential for value creation of the internal audit (IA) function, the human resource management (HRM) function, and the IA‐HRM pairing. A survey of 161 chief audit executives indicated that virtually all IA functions are risk managing in their audit approaches, while a great majority of HRM clients are also moderately or strongly strategic in their outlook. Findings included that a productive working relationship was strongest when a risk m anaging IA function is paired with a strategic HRM function. Also, the IA planning process was found to be more strategic in the presence of the same pairing. Analysis of written examples of strategic findings related to HRM supplied by the respondents suggested that there may be a significant gap between auditors’ knowledge of strategic HRM practices as developed in the literature and their self‐reported examples. Future research should use both HRM and IA responses to reduce bias. Additonally, there is a need for case studies of the IA‐HRM partnership.

The purpose of this paper is to examine the management of strategic public sector risks in communities and municipalities.

This research collates information on public sector risk management through a series of key informant interviews and content analysis of municipal plans.

Financial, environmental, social and other strategic risks were found to be important by communities but not necessarily managed as part of the strategic planning process.

The paper explores the question: what are the strategic risks that communities report on and how they are managed? What risks are identified in communities and how they are managed, if they have significant practical and social implications.

It is an interesting time to study public sector risk management. From a regional policy development perspective, public sector organizations will be facing substantial strategic risks in the coming years due to demographic changes (implications of the graying population), urbanization, economic downturns (or booms in certain regions of North America), as well as changes from advances in technology and communication.

The author points out that the same strategic behaviors that are associated with great success are also associated with failure. That is, the greatest rewards pose the greatest risks. He explains how corporations should manage risk differently at different levels of responsibility using the concepts of Requisite Uncertainty and strategic flexibility.

The author reexamines two classic examples of marketing innovation, Betamax and Microsoft, and suggests that the cases actually offer an unconventional lesson about risk/reward. To illustrate best practice he examines the case of the Johnson & Johnson Development Corporation.

Companies that have achieved greatness have typically done so only at the cost of increased risk – something that has been ignored in much of established strategic thinking. The new frontier of value creation is therefore the management of risk through a portfolio of business models.

This article describes a new method for managing strategic risk. It explains how to place critical strategic unknowns at the center of the strategic conversation.

The author introduces the concepts of Requisite Uncertainty and strategic flexibility as new ways of managing risk and suggests they be added to the management toolkit. Together, they represent a departure from how management has traditionally tackled the future's irreducible uncertainty.

This paper aims to highlight the importance and role of strategic cyber intelligence to support risk-informed decision-making, ultimately leading to improved objectives, policies, architectures and investments to advance a nation or organization’s interests in the cyber domain.

Integration of professional research literature from the fields of intelligence studies, strategy and information/computer security.

Investing in technology, firewalls and intrusion detection systems is appropriate but, by itself, insufficient. Intelligence is a key component. Cyber intelligence emphasizes prevention and anticipation, to focus cybersecurity efforts before an attack occurs (“left of the hack”). Strategic cyber intelligence can substantially reduce risk to the organization’s mission and valued assets and support its due diligence.

This paper describes how strategic cyber intelligence can be implemented and used within an enterprise to enhance its cyber defense, and create a more proactive and adaptive security posture. It not only describes strategic cyber intelligence as a distinct discipline, but also demonstrates how the key intelligence functions articulate with existing cybersecurity risk management standards.

The purpose of this paper is exploratory. The author seeks to put forward propositions on how firms may best conceive business risks in an environment characterised by constant change and uncertainty. To construct such a reality, the author examines how the military manages its engagement with strategic risk and uncertainty.

The paper presents a summated examination of literature published over the last four decades covering three major areas of management literature; risk management, competitive strategy and military tactics are conducted.

The propositions which are put forward provide the foundation for the empirical development of an appropriate framework for strategic risk management.

The major contribution of the study is that it has focused readers on not only strategic risk and competition, but on how lessons can be drawn from the military's experience of dealing with irregular forms of competition.

The paper aims to explore the optimal strategies of inventory financing when the risk-averse retailer has different objectives, in the presence of multi-risk, i.e. demand risk, non-operational risk and retailer's strategic default risk.

This paper develops an inventory financing model consisting of a bank and a risk-averse retailer with strategic default. This paper considers two scenarios, i.e. the capital-constrained retailer cares about its profit or firm value. In the first scenario, the bank acts as a Stackelberg leader determining its interest rate, and the retailer acts as a follower determining its pledged quantity. In the second one, the bank capital market is perfectly competitive. Lagrange multiplier method is adopted to solve the optimization.

The optimal strategies in inventory financing scheme in two scenarios are derived. Only when the initial stock is relatively high, the retailer pledges part of the initial stock. Retailer's risk aversion reduces its pledged quantity and performance. The strategic default reduces its profit. When it is relatively high, the bank refuses to offer the loan.

Analytical inventory and financing strategies are specified to help retailers and banks to better understand the interaction of finance and operations management and to better respond to multi-risk.

New results and managerial insights are derived by incorporating partially endogenous strategic default and risk aversion into inventory financing, which enriches the interfaces of operations management and finance.

The purpose of this paper is to introduce strategic managers to a multi‐perspective approach to thinking about risk.

This paper takes the form of a review.

An eight‐fold way of thinking about risk is suggested: as a formal idea in finance and economics; as fear of loss, often non‐monetary and qualitative; as something that influences strategic choice; as something that influences strategic behaviour; as a factor in position and status; as something the brain is adapted to deal with – quickly and efficiently; as something that effects the way strategic managers deal with information and impacts on their cognitive processing; and as something that, like resources, is shared between the organisation and its stakeholders.

The article suggests a practical checklist for strategists to think about the risk(s) of different strategic options and how it impacts on strategy evaluation and implementation.

The paper identifies the significant lacuna with regard to risk in modern strategic management.