Risk-taking, the engine driving business, is vital to companies seeking market success. Risks are, however, often thought of only as hazards, despite the fact that they can present significant opportunities and possibilities for organizational innovation and new competitive advantage leading to short- and long-term profitability.  In fact, risk and opportunity are a duality—like two sides to the same coin.  By focusing on the downside of risk companies can sometimes forego opportunities that might initially appear too risky, but which have never been formally analyzed.

Managing risks and opportunities is, in many ways, separate from the daily toils of business, and therefore necessitates an explicit effort to step back and see the full risk and opportunity picture.  Managing risk and opportunity is a continuum, which is increasingly related to strategy, operating performance, and shareholder value enhancement, in addition to compliance and prevention.

Companies that are successfully exploiting and protecting present opportunities and exploring future innovations, all the while managing risk, have been called “ambidextrous organizations.”[i]  These organizations are able to attend to the products and processes of past successes while capturing the opportunities that will define the future.  Creating an ambidextrous organization that 1) manages the downside risks and 2) focuses on value creation by capitalizing on opportunities, requires a system to identify, manage, measure, and monitor both risks and opportunities within the existing management structure. 

Integrating risks and opportunities into project planning through modified ROI or other calculations enables managers to better understand 1) the full range of risks their operations face and the opportunities available to them, and 2) their costs.  Although the output of the analysis is useful, the analysis process itself also allows strategizing for risk and opportunity management—to develop ways to avoid risk, to create risk mitigation plans, and to capitalize on opportunities.  After risks and opportunities have been fully explored and calculations made, it is important to integrate these processes with a management control system, which serves as the backbone to mitigating risk and pursuing opportunity.  

Moving beyond the traditional view of risk as a value-destroyer to seeing risk as a potential value enhancer requires creativity and vision, as well as a management control system within which this creativity can flourish and lead to market success.