The tools, techniques, and information resources that can provide support to the decision maker in improving the efficiency and effectiveness of his or her decisions. Many of these decision support tools may employ ICTs and be part of the management information system itself.
Published in Chapter:
Risk Management in the Digital Economy
Bob Ritchie (University of Central Lancashire, UK) and Clare Brindley (Nottingham Trent University, UK)
Copyright: © 2009
|Pages: 8
DOI: 10.4018/978-1-60566-026-4.ch525
Abstract
Business processes have been transformed by radical changes predicated on the digital economy. Every business sector has witnessed changes in the competitive structure of the marketplace, consumer preferences, buying habits, marketing and promotional strategies, production operations, internal administration systems, supply chain arrangements, and the opening up of the global economy. These changes provide an array of risks for managers. A study of 500 financial executives in Europe and America (FM Global, 2007) concluded that they expected an increase in overall business risks in the foreseeable future. Similarly, Harland, Brenchley, and Walker (2003) concluded that the risk exposure of organizations will heighten due to increased complexity, turbulence, and the dynamic and changing supply chain context. However, the digital economy is a two-edged sword in the sense that the information and communication technologies (ICTs) generating the additional uncertainties and risks also provide the means to enable decision makers to manage them more effectively. The key to survival in the digital economy depends on the abilities of managers to utilize ICTs effectively to manage uncertainties and risks. ICTs have largely been seen as helping to enhance database access, analytical powers, and the communications capacity of managers. The justification for these efforts has been based on the premise that more and better quality information will result in reduced uncertainty and improved risk perceptions in decision situations. In short, the outcome would be reflected in “better quality” decisions in terms of risk assessment and resolution. Key topic areas presented in this article include: • primary elements of the digital economy • overview of risk and risk management, • risk and uncertainty, • individual/organizational response to resolving risk, • role of information search and corporate intelligence, • contribution of the digital economy to risk resolution, • individual characteristics and risk perceptiveness, • management of risks, • risk perception, • information processing and risk resolution, and • risk management within the digital economy.