Surviving and Thriving in Uncertainty: Creating the Risk Intelligent Enterprise.

• Position: Book review

Surviving and Thriving in Uncertainty: Creating the Risk Intelligent Enterprise. By Frederick Funston and Stephen Wagner. John Wiley & Sons, 374 pages. $34.95.

The raison d'etre for this book is stated in the preface, with two probing questions: Why can't the cycle of business scandal, speculation, greed and recklessness be broken? Why does conventional risk management consistently fail at critical junctures?

The authors, consultants in the governance, regulatory and risk strategies services at Deloitte, argue that many companies have simply concluded that enterprise risk management (ERM) is too big and too complicated a concept to understand and implement. As a result, risk management is often done piecemeal, at the business-unit level, creating fragmented results that lack a harmonizing approach.

"Risk avoidance has traditionally been the foundation of risk management as commonly practiced in enterprises. As a result, events in the business and financial world over the past decade clearly demonstrated that risks encountered in the pursuit of value are rarely fully appreciated or properly managed," they write.

Nuggets of wisdom and skepticism abound. One of the fundamental hurdles to good risk management, the authors maintain, is a failure to challenge basic assumptions. "Many conventional approaches to risk management incorrectly assume that the strategy or the objective being pursued is the right one ... the enterprise must challenge the appropriateness of an objective and strategy, as well as the risks of carrying it out." That's difficult, they add, because "assumptions are usually deeply embedded in leaders' psyches and in the organization's business model, processes and culture."

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Many chapters contain an internal point-counterpoint. When the authors...