From the course: Executive Decision-Making

Assessing the greater risks

From the course: Executive Decision-Making

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Assessing the greater risks

- Executive decisions typically carry a much higher level of risk. Before you make an executive-level decision, understand what those major risks are. Those risks can include competitive responses to the decision you make. Some executive decisions have long incubation times to see if the decision was correct. And if it's not correct, the cost of being wrong can be much higher. To the extent possible, quantify these risks and build contingency plans for each one. Also, identify early warning triggers so you know if the decision is going in a bad direction. For example, I know of an executive at a financial services firm and they were in charge of operations. At one point, she decided to build an in-sourced, higher-cost call center model, and the basis for that executive decision was that having an in-source model would provide better customer service to the customers of the company. This entailed thousands of associates being hired, several buildings were built, and it was a long-term IT project. Ultimately, the decision didn't pay off because customers didn't really care. They didn't value that internal call center, and correspondingly, this turned into being a bad decision. Finally, there were some mass layoffs involved and those buildings had to be shut down. So, as you're looking at the executive decisions you're going to make, be sure you think through what those long-term risks are and identify how you can mitigate them before they become catastrophic.

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