Whether it’s a school trip, a parish council ‘s plan, a single business process, or a grand strategy, risk management is about identifying, understanding, and then addressing the risks that might stop you achieving your objectives. If you address them adequately, you should achieve your objectives. In a world where 95% of strategies fail (a figure produced by Harvard Business School research), the simple mission of risk management is to successfully deliver your strategy.
In the mid-1800s, Germany was a patchwork of kingdoms, grand duchies, duchies, principalities, and free cities. Several attempts at unifying it had failed in the past. Otto von Bismarck, who became prime minister of Prussia was initially against unification, but later changed his mind, seeing it as a necessary balance to the other powers in continental Europe, namely France, Austria and Russia. It became his main strategic objective and he saw two major risks: 1) the various duchies, etc may prefer independence to being part of a larger state, and 2) revolutionary ideals were sweeping Europe and they might undermine the new state, if it ever came into being.
He addressed risk #1 by finding unifying causes for the small German entities and this usually involved antagonising another country such as Denmark or France. By 1871, following the Franco-Prussian war, the German Empire was established (actually a federation). To address risk #2, Bismarck, who was no social reformer -far from it, nevertheless established the world’s first welfare state with accident and sickness insurance, and the first-ever state old-age pension. The outcome achieved was a unified and stable Germany which then enjoyed decades of peace and economic development.
Source: The Economist, Wikipedia, “The Balanced Scorecard” – Kaplan and Norton