TAKING RISKS: The Management of Uncertainty by Kenneth R. & Donald A. Wehrung with William T. Stanbury MacCrimmon

TAKING RISKS: The Management of Uncertainty

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KIRKUS REVIEW

While it has become almost obligatory for trendy management guides to applaud a willingness to take risks, two Canadian professors have been conducting a systematic study of the subject. The valuable result of their labors is this audit which confirms a few suspicions, takes brisk exception to much conventional wisdom, and otherwise provides an empirical basis for grasping what's involved in dealing with the downside at the executive level. The inquiry began in 1972 with a grant from an Ottawa ministry which wanted to learn more about the risk propensities of Canadian managers. Eventually, the authors wound up canvassing over 500 North American executives. In polling their representative (albeit all-male) sample, the pair took pains to evaluate both the behavior and attitudes of participants in circumstances exposing them to a chance of loss of various kinds. Accordingly, the questionnaires sought calibrated responses to standard business situations, so-called investment gambles (with personal as well as corporate assets at stake), and related what-if scenarios that required choices be made among alternatives. The results of the authors' research range from predictable to provocative. To illustrate, bankers typically fit their stereotypes, i.e., as being more cautious than, say, venture capitalists (a finding that leads the authors to speculate that conservative financial institutions might gain a competitive edge in a deregulated operating environment by recruiting from industries which produce aggressive risk takers). On the other hand, senior executives On any field) who are prepared to take chances in a corporate context tend to be appreciably more circumspect in their personal financial affairs; notable exceptions to this rule are recreational gamblers. Likewise, successful managers--in particular CEOs with advanced degrees--are more apt to run calculated risks than less experienced subordinates. Age and dependents also appear to foster a safety-first approach. Paradoxically perhaps, the authors conclude that executives at all levels are risk oriented far more in spirit than in fact. As card-carrying academics, the authors state their case complete with references to the work of peers and pedantic notes on methodology. As a practical matter, the format is such that non-scholars can track the main themes with little difficulty and, frequently, much pleasure. In brief, then, a game well worth the pricey candle. There's even a self-test for would-be plungers.

Pub Date: Jan. 1st, 1985
ISBN: 0029195632
Publisher: Free Press/Macmillan