Rule 25: Wring the Emotion Out of Risk Analysis


Overview

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SNAPSHOT

Do you enjoy taking risks?

Yes: 30 percent

No: 70 percent

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It is a new trend. Susan is the executive vice president of a publicly traded software company. Another company offers her the title of CEO. It looks like the chance of a lifetime. On a personal level, she is very excited. But she does not jump at the opportunity. Rather, she forces herself to remain cool to the idea of becoming a CEO. Instead, she hires a "due diligence" consultant—who has neither her emotional attachment to the idea of being a CEO nor the new company's incentive to paint a distortedly rosy picture of the job—to help her evaluate the risks associated with taking the new job. She wants a full assessment of (1) the financial status of the company, (2) its reputation for ethics, (3) the work environment and corporate politics, (4) the reason that the previous CEO left, and (5) the level of customer and shareholder satisfaction. And she wants it from an independent outsider, not someone who will put the best spin on the facts. Susan does not want to take the risk of walking into an Enron, Adelphia, Tyco, or Global Crossing in the making. Only after every stone is turned over and the company looks clean does she take the job.

One of the fatal flaws of near-invincible executives is that "they jump too quick," according to top prosecutor and attorney Ed Dowd. Truly invincible executives get no thrill out of taking risks, so they take the time to evaluate risks carefully and do not become so "invested" in their first favorable impression of a deal that they tune out the negatives that they later discover.




Staying Power. 30 Secrets Invincible Executives Use for Getting to the Top - and Staying There
Staying Power : 30 Secrets Invincible Executives Use for Getting to the Top - and Staying There
ISBN: 0071395172
EAN: 2147483647
Year: 2003
Pages: 174

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