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A World of Risk a Decade on – And a new Road Map to Understand It “The 5 Quadrants” - Risk Management Background Note

Working Paper
The authors published the Four Quadrants, a World of Risk and a Road Map to Understand it a decade ago, and the paper has anchored INSEAD’s Risk Management courses ever since. So, in 2021, it was time to ask a few questions; “has risk management changed?” “Does the risk classification model still hold up?” “Have we learned anything new in the past decade?” Turns out, they omitted a major risk genre – fraud and criminal intent. Welcome to the Five Quadrants, a revision of the original paper with updated examples and an additional risk category. With the new quadrant, the odds of slipping on that risk-banana-peel have just dropped markedly. For risk managers, the authors add fraud, ransomware, and deception to the original risk model. It is no longer sufficient to think of risk only in terms of complexity (simple or interconnected) and distributions (normal or fat). It is time to invoke your Minority Report sleuth-detection skills and catch the criminals before they catch you.

Senior Affiliate Professor of Entrepreneurship and Family Enterprise