This review explores a paper regarding the importance of risk management in today’s world. The article entitled “Managing 21st-Century Political Risk” is an adaption version of an essay written by Condoleezza Rice and Amy Zegart, that was published in the Harvard Business Review May-June issue this year. In the article, the authors first introduce Gabriela Cowperthwaite with her documentary about the San Diego SeaWorld, called Blackfish, and elaborating on the massive effects this had on SeaWorld.
It then starts to talk about political risk in the 21st century and how it can be defined as well as extending on how probable the upcoming of those risks actually is, even though the majority of companies tend to be in a misconception about this. Next, the article informs about how changes in politics, supply chain innovations and the constantly increasing importance of technology affect an organization in its effectiveness, but at the same time increasing the risks that arise as a result. Each of those three points is explained further on an example. The question of how to manage political risk in the best way is talked about in the next paragraphs. The authors present a model called “The Political Risk Framework”, that “focuses on four competencies: understanding risks, analyzing risks, mitigating risks that cannot be eliminated, and putting in place a response capability that enables effective crisis management”. First, the framework addresses the need to understand the importance of risks and elaborates on organizations “political risk appetite”.
Secondly, the need to analyze possible risks and possibilities on how to analyze them. Next, it addresses ways of how to mitigate the effects in the case of a risk being about to occur. In the last point, the authors talk about how to respond in case this event happens. After elaborating on this, the article brings up a detailed story on how the cruise company “Royal Caribbean” managed to cope with the public debate on the company when it seemed to ignore the devastation caused by an earthquake in Haiti back in 2010.
Finally, it gives a brief conclusion on the topic addressed in this article.