Nightly Business Report Presents Lasting Leadership: What You Can Learn from the Top 25 Business People of our Times

9. Managing Risk

Leadership involves coping with risk. It is no more possible to imagine a leader who shuns risk than it is to conceive of an innovator or entrepreneur who avoids it. Most leaders, however, are not uncontrolled gamblers (though some might be); they invoke factors that reduce the risks and make them manageable.

All businesses face uncertainty regarding the future because markets might be influenced by factors that are neither known in advance nor fully controllable. As such, tools like scenario planning have evolved, which let executives imagine alternate futures and develop strategies to deal with them. In no area of business, however, does risk management play such a crucial role as in finance. Banks confront market risk when ...