Risk as a Scarce Resource - Boards and the Attraction of Risk Capital (39 minutes)

When boards discuss risk, the negative framing that is often associated with the word 'risk' leads to biased, suboptimal decision-making around strategy. If risk-taking capacity, or risk capital, is rather considered as a scarce resource that needs to be carefully allocated to management teams and is an integral part of performance, this bias goes away. The view of stakeholders as capital providers also changes how boards think about engaging these parties in the governance of risk-taking in pursuit of corporate goals.