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Does Flexibility Mitigate or Enhance Risk?

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  • Sushil

    (Indian Institute of Technology Delhi)

Abstract

In volatile, uncertain, chaotic and ambiguous (VUCA) environment, flexibility is often used as a mechanism to hedge the risk. It would be worthwhile to have a discourse on this complex relationship of flexibility with risk. Risk, in general, is associated with uncertainty and can be measured in terms of probability of failure. In this short discussion of relationship between flexibility and risk, we will restrict the discussion on business risk and managerial risk only. As flexibility composes of options and change mechanisms, it might act as a suitable hedging mechanism for business risk. There are ample examples that indicate both the balancing and reinforcing relationships of flexibility with business risk. Another type of risk is more internal, that is, managerial risk. Flexibility initiatives to change internal functioning to implement both innovative processes and actor-based flexibility are assumed to reduce internal risk of managing various activities. The discussion in this paper points towards flexibility as a double-edged sword; on the one hand it has contributed to reduction of the risk, whereas it led to enhancement of the same on the other. It thus advocates a valuation of flexibility initiatives from a risk management perspective.

Suggested Citation

  • Sushil, 2017. "Does Flexibility Mitigate or Enhance Risk?," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 18(3), pages 169-171, September.
    • Handle: RePEc:spr:gjofsm:v:18:y:2017:i:3:d:10.1007_s40171-017-0156-6
    DOI: 10.1007/s40171-017-0156-6
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    Cited by:

    1. Aarti Singh & Ratri Parida, 2022. "Decision-Making Models for Healthcare Supply Chain Disruptions: Review and Insights for Post-pandemic Era," International Journal of Global Business and Competitiveness, Springer, vol. 17(2), pages 130-141, December.
    2. Mohammad Rashed Hasan Polas & Valliappan Raju, 2021. "Technology and Entrepreneurial Marketing Decisions During COVID-19," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 22(2), pages 95-112, June.
    3. Sanjai Kumar Shukla & Sushil & Manoj Kumar Sharma, 2019. "Managerial Paradox Toward Flexibility: Emergent Views Using Thematic Analysis of Literature," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 20(4), pages 349-370, December.
    4. Riccardo Aldrighetti & Ilenia Zennaro & Serena Finco & Daria Battini, 2019. "Healthcare Supply Chain Simulation with Disruption Considerations: A Case Study from Northern Italy," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 20(1), pages 81-102, December.
    5. C. O. Iroham & M. E. Emetere & H. I. Okagbue & O. Ogunkoya & O. D. Durodola & N. J. Peter & O. M. Akinwale, 2019. "Modified Pricing Model for Negotiation of Mortgage Valuation Between Estate Surveyors and Valuers and Their Clients," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 20(4), pages 337-347, December.
    6. Shashank Mittal, 2019. "Role of Continuity, Specificity and Frequency of Firm–Supplier Exchanges in Customer Fulfilment: Evidence from Latin America," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 20(1), pages 25-37, December.
    7. Bozena Gajdzik, 2022. "How Steel Mills Transform into Smart Mills: Digital Changes and Development Determinants in the Polish Steel Industry," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 27-42.
    8. Khushboo Gulati & Seema Gupta & C. P. Gupta, 2020. "The Transformation of Governance System: A Decade Long Experience of Corporate Governance Using Meta-analysis," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 21(3), pages 233-262, September.
    9. Samta Jain & Smita Kashiramka & P. K. Jain, 2018. "Impact of Organizational Learning and Absorptive Capacity on the Abnormal Returns of Acquirers: Evidence from Cross-Border Acquisitions by Indian Companies," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 19(4), pages 289-303, December.
    10. Manju Tripathi & Smita Kashiramka & P. K. Jain, 2018. "Flexibility in Measuring Corporate Financial Performance, EVA Versus Conventional Earnings Measures: Evidences from India and China," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 19(2), pages 123-138, June.
    11. Pradeep Kumar & Sasadhar Bera & Tanusree Dutta & Shibashish Chakraborty, 2018. "Auxiliary Flexibility in Healthcare Delivery System: An Integrative Framework and Implications," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 19(2), pages 173-186, June.
    12. Nakul Parameswar & Sanjay Dhir & Sushil, 2020. "Interpretive Ranking of Choice of Interaction of Parent Firms Post-International Joint Venture Termination using TISM-IRP," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 21(1), pages 1-16, March.

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