Firing Line: Preparing for Risky Situations

There's little argument that a lack of risk management in many companies is one of the main reasons our economy has flamed out.

After the catastrophic collapse of the financial system, it's essential that we debrief to garner lessons learned so we can be prepared for the next time something like this occurs. And it will happen again. Rep. Barney Frank (D., Mass.) recently called upon Freddie Mac and Fannie Mae to ease lending standards to prospective condo buyers in distressed areas. Sound familiar?

When it comes to risk management in my finances or running a business, I apply a combat-tested methodology that I've adapted to the business world called ARSA: Avoid, Reduce, Spread, Accept. ...