Scholarly Articles

Scholarly Articles

Read Our Selection of Strategic Thinking and Risk Management Scholarly Articles Writen By Experts in Their Field

Risk Management Articles

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Essays in Corporate Risk Management and Optimal Hedging

Over the last decades, risk analysis and corporate risk management activities have become very important elements for both financial as well as non-financial corporations. Firms are exposed to different sources of risk, which can be divided into operational risks and financial risks. Operational risks – or alternatively business
risks – relate to the uncertainty regarding the firm’s investments and investment opportunities, and are influenced by the product markets in which a firm operates. In addition to operational risks, unexpected changes in e.g. interest rates, exchange rates,
and oil prices create financial risks for individual companies. As opposed to operational risks, which influence a specific firm or industry, financial risks are market-wide risks that can affect the financial performance of companies in the whole

laboratory test tubes

Culture and the Democratization of Risk Management:

This article considers culture in the explanation of the gap between North America and Europe in the area of genetically modified organisms (GMOs). Thanks to a comparison of Canada and France, the article distinguishes between two cultures of GMO risk management: the culture of managerial rationality (Canada) and the culture of integration (France). The first culture provides proponents of scientific neutrality the tools to preserve itself from external criticisms. In contrast, the second culture creates a proper environment for its contestation from within. When the democratization of science became an issue in the 1990s, the culture of integration transformed itself significantly, allowing debates within risk management processes. This change
contributed to the gap between Europe and North America over GMOs

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Cattle Farmers’ Perception of Risks and Risk Management Strategies

This study analyzes cattle farmers’ perceptions of risk and risk management strategies in Tigray, Northern Ethiopia. We use survey data from a sample of 356 farmers based on multistage random sampling. Factor analysis is employed to classify scores of risk and
management strategies, and multiple regression is then used to investigate the relationship of scores and farmers’ characteristics. The results demonstrate that shortage of family labor, high price of fodder and limited farm income were perceived as the most important risks. Use of veterinary services, parasite control and loan utilization were perceived as the most important strategies to manage risks. Livestock disease and labor shortage were perceived
as less of a risk by farmers who adopted the practice of zero grazing compared to other farmers, pointing to the potential of this practice for risk reduction. We find strong evidence
that farmers engage in multiple risk management practices in order to reduce losses due to cattle morbidity and mortality. The results suggest that government strategies that aim at reducing farmers’ risk need to be tailored to specific farm and farmer characteristics. Findings from this study have potentially important policy implications for risk management strategies in developing countries.

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An Approach To Risk Management in China

Enterprise Risk Management (ERM) strengthens decision-making by increasing the risk detection capabilities of managers and orchestrating coordinated responses to risk scenarios. This approach compels managers to discard silo and checklist mentalities for structured approaches with actionable outcomes (AAI, 2010; Burnaby & Hass, 2009; KPMG, 2001; PWC, 2015). Thus, ERM is also a significant source of competitive advantage (Barton et al.,2002). Robust approaches to ERM are essential in rapidly developing nations. Despite the upsides of doing business
in burgeoning economies, which include competitive wages, investment incentives and political patronage, “hidden risks” still abound. For example, the “impulsive nature of host country politics” creates uncertainty while the “selective lack of regulation” (Henisz & Zelner, 2010) can divert home country profits into the host’s pocket (HBR, 2008). Cultural worldviews also shape ideas about politics, economics, business, society and indeed, ERM.
Significant gaps in these understandings often occur between groups at opposite ends of the cultural continuum – like Chinese and Western managers, for example. In this light, managers in China should be aware that data concerning risk filter through a socially-constructed environment, where the idiosyncratic nature of the Chinese cultural architecture makes it “perfectly possible” for foreign managers to believe their actions and assessments
are appropriately while their Chinese counterparts think the exact opposite (Goodall et al., 2007).

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A Performance Oriented Risk Management Framewok for Innovative R&D Projects

Uncertainty is one of the major inherent difficulties in developing innovative products, due to their highly dynamic markets and technologies. The presence of a large degree of uncertainty leads to high R&D risks, resulting in many R&D failures. Therefore, it is important to manage R&D risks through all R&D stages to improve R&D project success rates. This paper proposes a new risk management framework that aligns project risk management with corporate strategy and a performance measurement system to increase success rates of R&D projects and to accomplish corporate strategic goals. The balanced scorecard is used to identify major performance measures of an R&D organization
based on the firm vision and strategy. Quality function deployment is adapted to transform organizational performance measures into project performance measures and a systematic procedure
is developed for risk identification, assessment, response planning, and control. The proposed risk management framework enables an R&D project to be focused on achieving the corporate goals and
provides a more effective way to identify, assess, analyze, and monitor R&D risks along the project cycle. The proposed methodology is illustrated with a drug development project

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Enteprise Risk Management Models

Enterprise risk management has always been important. However, the events of the twenty-first century have made it even more critical. Nature has caused massive disruption, such as the tsunami that hit Fukushima in March 2011. Terrorism has seemed to be on the rise, with attacks occurring in the USA, Europe, and Russia
with greater regularity, not to mention the even more common occurrences in the Middle East. Human activities meant to provide benefits such as food modification and medicine have led to unintended consequences. The generation of energy involves highly politicized trade-offs between efficient electricity and carbon
emissions, with the macro-level risk of planetary survival at stake. Oil transport has experienced traumatic events to include the BP oil spill in 2010. Risks can arise in many facets of business. Businesses in fact exist to cope with risk in their area of specialization. But chief executive officers are responsible to deal with any risk fate
throws at their organization.

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Innovativeness, Operations Priorities and Corporate Performance

The paper analyzes the relations among the manufacturing firm’s
innovativeness, operations priorities, and corporate performance.
As opposed to common practice in the literature in which these
relations are analyzed on a dichotomous (high vs. low) classification of innovativeness mostly based on product and/or process innovations, a taxonomy based approach is used here. Our findings demonstrate that leading innovators simultaneously compete effectively on multiple operations priorities and obtain the best corporate performance. This research also demonstrate that incorporating shades of grey via the more elaborate taxonomy
based approach reveals hidden relations that were otherwise
buried in the data

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Proactive Risk Management

Risk management is an essential element of modern business administration. All business firms face potential for loss from lawsuits and accidents. Risk management is the art and science of anticipating potential losses and developing a plan to survive them. In modern text books, this topic has been examined from different perspectives: from a legal perspective, discussing the legal ramifications of different types of risks; from a statistical view point, generating mathematical models to identify probabilities of risk; from a philosophical viewpoint, providing elegant theories; and from a practitioners’ view point. The last mentioned is a relative rarity. Most modern textbooks approach this topic from legal perspective, statistical perspective, or a combination of both. The problem with the majority of these textbooks is that they tend to get esoteric, especially those that approach this topic from a
mathematical perspective.

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Quantitative Model For Information Security Risk Management

The paper presents a mathematical model to improve our knowledge of information security and risk management in contemporaneous businesses and other organizations. In the world of permanent cyber-attacks to information systems the knowledge about risk management is becoming a crucial task for minimization of the potential risks that can endeavour their operation. Therefore, it requires good knowledge of information security. The prevention of the heavy losses that may happen due to cyber-attacks and other failures in an organization is usually associated with knowledge about appropriate investment in different security
measures. With the rise of the potential risks from different cyber-attacks the investment in security services and data protection is growing and is becoming a serious economic issue to many organizations and enterprises. The paper presents a mathematical model for the optimal security-technology investment evaluation and decision-making processes based on the quantitative analysis of security risks and digital asset assessments in an enterprise. The
model makes use of the quantitative analysis of different security measures that counteract individual risks by identifying the information system processes in an enterprise and the potential threats. The selection of security technology is based on the efficiency of selected security measures. Economic metrics are applied for the efficiency assessment and comparative analysis of different protection technologies. Unlike the existing models for
evaluation of the security investment, the proposed model allows direct comparison and quantitative assessment of different security measures.

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Risk Management Systems Paradigm

The management of risks arising from products, systems, projects, or business undertakings is a broad subject. The fundamental tenets of risk management is anticipation/forecasting and timely prevention or mitigation against all undesirable safety, commercial, and potentially environmental facets in a given context. In practice, given the potential for failures and loss posed by advancing technologies and complexity in the world around us, the discipline of risk management has not evolved to cope with the enormous challenges posed. This paper proposes a rational and structured approach to this largely subjective discipline, based on emergent properties of a system of principles. It is argued that systematic risk management also constitutes a fundamental and potent component of the safety case regime in vogue
today. © 1999 John Wiley & Sons, Inc. Syst Eng 3: 156–167, 1999

man using atm machine

Risk Management and Culculative Cultures

Enterprise risk management (ERM) has recently emerged as a widespread practice in financial institutions. It has been increasingly codified and encrypted into regulatory, corporate
governance and organizational management blueprints. A burgeoning literature of regulatory and practitioner texts is indicative of the apparent diversity of ambitions, objectives
and techniques that constitute the ERM agenda. Making sense of these developments is a challenge. This paper presents field-based evidence from two large banking organizations suggesting that systematic variations in ERM practices exist in the financial services industry. The cases illustrate four risk management ideal types and show how they form the ‘risk management mix’ in a given organization. Further, drawing on the literature of the roles and
uses of management control systems (MCS), the paper explores how ERM achieved organizational significance in the studied settings. The findings are indicative of the current co-existence of alternative models of ERM. In particular, two types of ERM models are postulated: one driven by a strong shareholder value imperative (ERM by the numbers), the other corresponding to the demands of the risk-based internal control imperative (holistic ERM). This paper explains the differences in the two risk management mixes pointing towards alternative logics of calculation [Power, M.K., 2007. Organized Uncertainty—Designing a
World of Risk Management. Oxford University Press, Oxford], which I conceptualise and describe as different calculative cultures. The study suggests that calculative cultures, which in these cases shaped managerial predilections towards ERM practices, are relevant, albeit so far neglected, constituents of the fit between MCS and organizational contexts.
© 2008 Elsevier Ltd. All rights reserved

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Risk Management and The Cost of Banking Crisis

The 2007-8 banking crisis in the advanced economies has exposed
deficiencies in risk management and prudential regulation approaches that rely too heavily on mechanical, albeit sophisticated, risk management models. These have aggravated private and economic losses, while perhaps protecting the taxpayer from bearing quite as high a share of the direct costs as in typical crises of the past. Policymakers and bankers need to recognize the limitations of rules based regulation and restore a more discretionary and holistic approach to risk management.

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Risk Management in Agriculture: India Case Study

The enterprise of agriculture is subject to great many uncertainties. Yet more people in India earn their livelihood from this sector than from all other sectors put together. This includes large number of the poor who have little means of coping with adversities. Understanding agricultural risks and the ways of managing it is therefore a topic that deserves serious attention and research. On the basis of existing literature, this study documents the status of our knowledge on risks of agriculture and their management.
Inspite of its manifest importance, risk management in agriculture is an under researched topic relative to traditional concerns such as land tenure, technology adoption and food policy.

man people woman internet

Risk Management In Islamic Banks

The use of financial services and products that comply with the Shariah principles cause special issues for supervision and risk management. Efficient risk management in Islamic banking has assumed particular importance as they try to cope with the challenges of globalization. This paper highlights the special and
general risks surrounding Islamic banking. It also explains the key challenges ahead to promote further development of Islamic banking in the global financial system. As The developing of managing risks tool becomes very essential especially in Islamic banking as most of the products is depending on PLS principle , so identifying and measuring each type of risk is highly important and
critical in any Islamic financial based system. Another approach on the recommendation is showing how the Islamic banking can
be an ideal alternative than the current conventional banking system . emphasizing the role of Islamic banking on hedging against the economic crisis and the how it can be an add value to the nationals economics in terms of making the society more productive .

green and grey circuit board

Risk Management in IT Governance Framework

The concept of governance has an already old contour: the system by which business corporations are directed and controlled. The most praised principles regarding shareholder rights, transparency and board accountability now constitute the foundation for new tendencies evolved from such ground. Executive compensation, transparency and shareholder reporting are new issues attached to board responsibilities. Besides such almost negative approaches the board faces a more and more prominent role from risk management and IT governance perspective. Nowadays is generally acknowledged that the board is in charge for managing and controlling the risks to assets of the enterprises and business future. IT Governance has emerged as a support for corporate governance, as an important part of board’s striving efforts to perform better in a competition environment. These responsibilities, risk management and IT Governance, remain within the framework of old concept of corporate governance and are fed from its substance. The interaction between these concepts is the core interest of this research. IT Governance is defined as procedures and policies established in order to assure that the
IT system of an organization sustains its goals and strategies. The management of the organisations face a new challenge: structural redefinition of the IT component in order to create plus value and to minimize IT risks through an efficient management of all IT resources of the organisation. The evolution of the present IT environment is a natural process according to which business environment should adapt.

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Risk Management In The Development of New Products In The Pharmaceutical Industry

Due to the excessive new product research opportunities and limited financial resources, deciding which new pharmaceutical products to develop can be a challenging and lengthy process for many pharmaceutical companies. The returns on investment are attractive, but they vary considerably between drugs. New pharmaceutical products usually undergo costly and time-consuming testing before receiving government approvals for distribution to patients (Congressional Budget Office, 2006).
Only about one percent of researched chemical molecules withstands the three phases of clinical trials, the scrutiny of the Food and Drug Agency (FDA), and becomes available for
patient use. In addition, research and development (R&D) costs can reach more then $800 million to develop and test a potential drug, so the selected product must return at least the accrued financial expenditures over its lifecycle (Nelson, 2009). With such high development costs and low probability of product success, project-prioritization and new productportfolio selection are of high importance to pharmaceutical managers. Trading off available resources and investment opportunities helps identify drugs worthwhile to bring to market (Ogawa & Piller, 2006).
In the pharmaceutical industry, the risk management problem includes deciding which new products to develop, continue to research, terminate, and invest in. These decisions include trading off risks, returns, and time horizons for future payoffs. In theory, such tradeoffs are easily undertaken by optimization problems; however, the complexity and uncertainty of the new drug development process can make the optimal solution hard to obtain, and may result in employing less complicated, and therefore, less precise methods of new product identification (Gino & Pisano, 2006).

machine harvest

Risk Navigator SRM: An Applied Risk Management Tool in Agriculture

Risk Navigator SRM is a ten-step risk management program for agricultural producers, which is based on the strategic planning process. The ten steps are designed to integrate disparate and
difficult risk management concepts into a single system that is easy to use, yet still effective. With the aid of computers and the internet, producers can work through each step toward a final
comprehensive plan. The website includes 25 decision tools that help producers accomplish each step and provides links to complementary educational programs, like a national agricultural risk education library, the award-winning risk management simulation program called Ag Survivor, and a recently published book that describes the program and provides additional depth and explanations. The ten-step program has been presented in over 200 workshops with over 90 percent approval by participants. The website has averaged over 1,000 unique visitors per month
from 120 countries.

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Risk Identification Process

There are many risk identification methods such as
 Documentation Reviews
 Brainstorming
 Delphi Technique
 Interviewing
 Root Cause Analysis
 SWOT Analysis (Strength, Weakness, Opportunities
and Threats)
 Checklist Analysis

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Configurations of the Manufacturing SMEs Competitiveness Factors Under Globalisation

The goal of this paper is to reveal the configurations of the manufacturing SMEs strategic competitiveness factors. These factors differ from the operational ones in the sense that they are innovation related and assume significant organisational changes.
Such factors refer to product and process innovations, use of advanced technology, implementation of the IT and international standards, creation of own trademarks and patents, internationalisation, networking, use of marketing strategies, etc. By developing these factors SMEs could follow the low cost strategy, the differentiation strategy, or their combination.
The research is based on Porter’s framework, resource based view, and configuration approach. Building on these theories, the paper aims to answer the research questions, related to the main factors, which determine the manufacturing SMEs competitiveness under globalization; factors’ configurations in clusters; and characteristics of firms from the respective clusters.

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Spatial Technology For Risk Management

Spatial information technology is a tool that supports for researching natural disaster risk management programs of flooding, fire forest, and landslides. Flooding disaster management
provides a quick response to the rapid onset of disaster by Flood Early Warning System and Flood Monitoring and Mitigation, hence the use of NOAA AVHRR and GMS data in order to better mitigate and manage disasters. Developing a peat swamp forest fire disaster
management system, improve the existing method of forest fire hazard assessment and dynamic distribution resource. The study integrates high spatial resolution remote sensor data with Geographyical Information System (GIS) data and multi criteria analysis for developing a methodology to model peat swamp forest fire disaster risk, to assist in providing decision support systems for emergency operations and prevention action. Landslide is the result of wide variety of processes, which included geological, geomorphological, and meteorological factors such as lithology, structure, soil cover, slope aspect, slope inclination, elevation, and rainfall. The spatial technology has the ability to assessment, estimation of landslide hazard region by creating thematic maps and overlapping them to produce final hazard map, that leads to instability in the region by classifying the region to three categories: low, medium, and high risk.

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Strategic Risks Mitigation: The Determinants of Innovation Capability in Nigeria

Although there is a substantial body of literature on technological
capabilities and innovation in general, in-depth understanding of the technological behaviour of manufacturing enterprises in the developing country context is still largely limited. What factors influence them to innovate? What should be the concern of policy makers and practitioners in enhancing firm-level innovativeness? The study reported herein attempted to answer these questions using microlevel data from the cable and wire manufacturing subsector in Nigeria. Focusing on product and process innovations, measures were constructed to assess the factors that significantly influence the incidence of product and process innovations. Our results point out that linkage and collaboration are more important than firm-related variables in promoting an innovation capability. Ultimately, this suggests that policies need to be directed
at facilitating partnerships within the National Innovation System (NIS) and that firms need to consciously pursue and engage in collaborations and linkages.

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Strategic Risk Mitigation: An Integrated Innovation Management Framework

Through our literature review we realized that the full implementation of innovation framework in many organizations does not appear to take place routinely within management practice and that, where it does, it tends to focus on output measures. Further, from the relatively small number of empirical studies of frameworks in practice, measurement of innovation management appears to be undertaken infrequently as an ad hoc approach, and relies on outdated innovation frameworks. In this paper we introduce an integrated and comprehensive framework that addresses the innovation management at both levels of the firms and projects. We developed a synthesized innovation management framework that consists of eight dimensions including the Innovation Balanced Scorecard (IBS) to measure four categories of innovation Key Performance Indicators (KPI), Open Innovation, and Commercialization. The paper makes two important contributions. First, it takes a step of incorporating a vastly diverse innovation frameworks into a single framework with several newly added dimensions. Second, through the application of this framework to a particular context, practitioners will be able to conduct an evaluation of their own innovation management activity, identify gaps, weaknesses or inadequacies, and also improvement potential.

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Supply Chain Disruption and Risk Management

This special issue was created to recognize the very substantial overlap between transportation research and supply
chain research. In this special issue, we have compiled an assortment of papers that illustrate a wide range of modeling
styles associated with determining the performance of supply chains and the risks associated with them. The papers are,
for the most part, theoretical and do not consider real data sets.
The following mathematical perspectives are employed by the papers presented herein:

  1. Mixed integer linear programming.
  2. Nonlinear programming.
  3. Stochastic mathematical programming.
  4. Robust optimization.
  5. Optimal control theory.
  6. Differential game theory.
  7. Exact and heuristic algorithms.

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Technology Risk Mitigation

Technology is undergoing massively within rapid change and its adoption happens around us every day. The rate of new product introduction and adoption are speeding up across the board. Today, a typical automotive design cycle is approximately 24 to 36 months, which is much faster than the 60 month life cycle from five years ago. Beginning before 1900, the telephone took decades to reach 50% of households. On the other hand cellular phones only took less than five years to accomplish the same penetration in 1990. Other phenomena present similar results. It took 30 years for electricity and 25 years for telephones to reach 10% adoption but less than five years for tablet devices to achieve the 10% rate. In addition new and improved technological innovations emerge almost daily. All of our companies are digital now – or quickly becoming that way. It push most companies, no matter the industry or sector, for using new technology to harness the vast new oceans of data being generated by such digital stuff and myriad other sources of information originating from customers and markets. The rate of new technology development now is an unprecedented increase accompanied by a general acceleration in the pace of competition. Therefore introducing new technology is critical to the survival of established companies’.

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The Identification of Risk

I start with the troubling thought that mainstream development
economics over the last 50 years has been obsessed with achieving high growth, since growth was associated with development and the eradication of poverty. But there was no clear realization that high growth can be achieved only at high risk. Developing countries really need to think very carefully about how to manage the risks of growth on a national basis rather than on a sectoral basis.

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Construction Risk Management Framework: A South African Case Study

This study will be helpful to many companies in developing countries, dealing with engineering and construction project management. The study is important because many companies especially smaller emerging firms do not have proper frameworks
and methodologies in place to deal with risk and therefore they lose millions of Rands due to poor risk forecasts. The framework once modified and developed will be used by a variety of engineering and management firms in South Africa as well as any
other developing country.

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The Theme of Risk Management

The paper examines the causes for disruptions, delays and failures in the delivery of IT-based services. The quality of service did not meet expectations when compared to that before the project. Among a number of key reasons for such failures, poor quality and risk management practices stand out with extremely low scoring, with the latter being the worst. A systematic framework comprising project management processes including a risk analysis plan was recommended.

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Training in Risk Management

Experience is a great teacher, but the fees are high! The paper describes the author’s experiences of training British Telecommunications plc (BT) project managers and their teams about risk management (which includes both risk assessment and risk control). Risk management uses a manager’s experiences to help the manager make judgments about what may happen in the
future. The author’s experience of helping project managers to use risk management techniques may enable others to avoid (or be prepared for) the mistakes that are easily made. The paper includes a number of fundamental principles and recommends ten key points that should be considered when using risk management techniques. The fee for this experience is unusually low–all the reader has to do is invest some time in reading through the paper.

Strategic Thinking & Planning Articles

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Empowering Decision Makers

In 2020, ThoughtSpot sponsored research by Harvard Business Review Analytic Services to bring you research demonstrating the power of the new decision makers—those employees on the front lines of your business responsible for interacting with customers, partners, vendors, and more. Their decisions are the new competitive battleground for business. They can make or break your ability to operate efficiently, deliver exceptional products and services, and satisfy customers so they keep coming back for more.


Major Events Shaping 2021

Each year brings its own challenges, and 2021 revealed the difficulties of returning to a new normal after the pandemic. The spread of the virus left its mark on all aspects of life, the economy, national and international politics, and on how we function as a society and individuals. By evaluating global media coverage, timelines, and relevant data this DossierPlus looks back on the development of the pandemic and the fight against it, as well as the main economic, political, and social events shaping this year, capturing the changes and trends 2021 induced. ▪ Although the development of COVID-19 vaccines was a significant step toward curbing the spread of the virus, the end of the pandemic is nowhere in sight. Many countries are experiencing the fourth wave asthe year comes to an end. Although billions of vaccines have already been distributed worldwide, global vaccination rates are still not at a level that could halt the spread of the virus.
▪ The global economy began to recover from the effect of the pandemic, but the economic revival has been hindered by supply shortages, labor shortages, and increasing prices. The blockage of the Suez Canal also revealed the weaknesses of global supply chains

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A Guide To Strategic Foresights

AGRiP members use strategic foresight when they want to anticipate the future, innovate new products or services, or strengthen their membership advantages. Some pools have used strategic foresight as part of an annual Board planning meeting. Others have used it to guide work on a very important or targeted project (like starting a new line of coverage).

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Strategic Leadership in Dynamic Environments

Adopting a cross-level mixed effect model, this paper proposes transcendent leadership as a framework for the key responsibilities of strategic leaders in today’s dynamic contexts. A transcendent leader is a strategic leader who leads within and amongst the levels of self, others, and organization. Leadership of self includes the responsibility of being self-aware and proactive in developing personal strengths. Leadership of others involves the mechanisms of interpersonal influence a leader has upon followers. Leadership of organization comprises the alignment of three interrelated areas: environment, strategy, and organization. Propositions are presented regarding the relationship between leadership of the various levels and firm performance.
© 2008 Elsevier Inc. All rights reserved.