TY - JOUR
T1 - Risk, uncertainty, ignorance and myopia: Their managerial implications for B2B firms
AU - Oehmen, Josef
AU - Locatelli, Giorgio
AU - Wied, Morten
AU - Willumsen, Pelle Lundquist
PY - 2020
Y1 - 2020
N2 - Rare events are common: Even though any particular type of ‘rare event’ - a world war, global economic collapse, or pandemic for that matter - should only occur once every 100 years, there are enough of those types of ‘rare events’ that overall, they commonly occur about once every 10 years. As we are currently experiencing with the COVID-19 pandemic, we do not sufficiently leverage the rich toolset that risk management offers to prepare for and mitigate the resulting uncertainty. This article highlights four aspects of risk management, and their practical and theorical implications. They are: 1) Risk (in the narrower sense), where possible future outcomes can be captured through probability distributions. 2) A situation of uncertainty, where there is transparency regarding what is not known, but probability distributions are unknown, as well as causal relationships influencing the outcome in question. 3) A situation of ignorance, where there is no understanding that certain possible future developments are even relevant. And finally: 4) The emergence of organizational and inter-organizational myopia as an effect of risk, uncertainty and ignorance on collective human behaviour.
AB - Rare events are common: Even though any particular type of ‘rare event’ - a world war, global economic collapse, or pandemic for that matter - should only occur once every 100 years, there are enough of those types of ‘rare events’ that overall, they commonly occur about once every 10 years. As we are currently experiencing with the COVID-19 pandemic, we do not sufficiently leverage the rich toolset that risk management offers to prepare for and mitigate the resulting uncertainty. This article highlights four aspects of risk management, and their practical and theorical implications. They are: 1) Risk (in the narrower sense), where possible future outcomes can be captured through probability distributions. 2) A situation of uncertainty, where there is transparency regarding what is not known, but probability distributions are unknown, as well as causal relationships influencing the outcome in question. 3) A situation of ignorance, where there is no understanding that certain possible future developments are even relevant. And finally: 4) The emergence of organizational and inter-organizational myopia as an effect of risk, uncertainty and ignorance on collective human behaviour.
KW - Risk management
KW - Resilience
KW - Myopia
U2 - 10.1016/j.indmarman.2020.05.018
DO - 10.1016/j.indmarman.2020.05.018
M3 - Journal article
VL - 88
SP - 330
EP - 338
JO - Industrial Marketing Management
JF - Industrial Marketing Management
SN - 0019-8501
ER -