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importance of strategic decision making

T his thought leadership paper will provide insights and practical approaches to enhance strategic planning by anchoring enterprise risk management (ERM) into existing strategic planning processes and enabling actionable risk-informed decision-making. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. In the modern day, you now have all the organizational data you would ever need to inform and guide your decision-making process, and intuition alone is more than likely to lead you in the wrong direction. However, companies often struggle to identify them, assess them, and quantify them. This approach readied the organization to implement the pre-approved risk-informed plans in an agile manner and maintain a focus on delivering its long-term strategic goals and objectives. While taking a calculated risk, you must set a threshold to qualify your decisions. In simple  terms, ERM is not helping leaders make risk-informed business decisions. Quantify Your Decision-Making Approach. Quantify Your Decision-Making Approach “Gut-level” decision making is a practice of the past.

Upside risks — offer benefits and present opportunities to enable business strategy and achieve performance management objectives. Simultaneously, they’re missing out on exceptional opportunities within upside risks — ones that could bring game-changing transformation and increasing their competitive advantage. “Gut-level” decision making is a practice of the past. Risks, viewed more holistically, can become rewards. Strategic decision making, or strategic planning, involves in the process of creating an organization's mission, values, goals and objectives. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity.

In addition, companies realize that outside risks can threaten the very existence of any organization and can have a significant impact on an organization’s strategy. Examples include: Addressing these risks requires a different approach, one that includes identification and mitigation of their impact through scenario analysis and stress testing to determine whether the organization has the minimum resources to weather the full impact of external events.

Each of these categories requires a different management approach that will  benefit organizations. Many organizations are now realizing that their strategic planning efforts lack a risk vs. opportunity discipline and an integrated performance management focus. In my 28 years of working for different types of organizations – public, private and consulting for companies from $4 million in revenue to $1.5 billion in revenue – I continue to be surprised how decision making impacts an organization.

Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. All companies are exposed to these risks originating from outside their direct sphere of influence. According to a survey taken as of now the process of strategic decision making can be executed in a few steps and the selected strategy must be sufficiently robust to enable the firm to perform activities differently from its rivals or to perform similar activities in a more efficient manner. The need for organizations to link risk and strategy was further underscored in two recent ERM framework updates: This emphasis on the role of risk makes sense: risk-taking is fundamental to economic reward. Risk is inherent in each of these situations, and a fumble at the wrong moment can lead to serious consequences for an individual’s career success and a company’s longevity. Strategic decisions involve a change of major kind since an organization operates in ever-changing environment. The bottom line is, organizations must construct a more resilient strategy focused on delivering performance results and enabling long-term viability while leveraging risk insights gained through enterprise risk management.

It is always a good habit to see what practices other companies are using to execute successful strategic decisions. In today’s rapidly shifting market landscape, the ability to make effective data-driven decisions is crucial for a variety of essential business operations across an organization. Enhance strategic planning and enable informed decision-making by anchoring enterprise risk management (ERM) into your planning processes. Feb 7 Back To Home How Decision Making Impacts An Organization. Are we allocating capital on a risk-adjusted basis to optimize our finite resources? First it looked at the definition of data in relation to information and knowledge. Decision making is central to all the managerial activities, be it planning, organizing, staffing, directing or controlling. 3. The reality is that organizations want — and frankly need — ERM to inform business decision-making using data and metrics. Just like a GPS might give you different route options for the same destination based on time, distance or fuel efficiency, your strategic plan defines the high-level destination, but your decision-making tools help you decide how to get there based on your decision-making framework. In this volatile environment, it’s not enough to just predict or forecast within the existing scope of business (though you should).

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