25.7 History and Definition

Definition 25.7 (Strategy - Merriam-Webster)

  1. Science and art of employng the political, economic, pyschological and military forces of nation to afford the maximum support to adopted polices

  2. The science and art of military command to meet the enemy under advantageous conditions

  1. A careful plan or method

  2. An adaptation for achieving evolutionary success, such as foraging strategies of insects

Definition 25.8 (Strategy - Mango)

  • Science and art of planning

  • Using political, psychological, and organizational resources

  • To achieve major organizational goals

Remark. The above aligns well with the GIRO (General Insurance Research Organization) definition

Definition 25.9 (Strategy - GIRO) A long term series of actions designed to take a company from its current state to its desired future state, and aim to provide a sustainable competitive advantage over other companies in the same market

Strategy in NOT:

  • Business planning, strategy considers a wider breadth of issues such as the market, and where the company sits

  • Tactics, as these are short term

Definition 25.10 (Strategic Risk)

  • Intentional risk taking

  • Unintentional risk as by-products of strategy planning or execution

Definition 25.11 (Strategic Risk - OCC) Risk to earnings or capital arising from averse business decisions or improper implementation of those decisions. … Its focus is on how plans, systems and implementation affect the franchise value

Remark.

  • OCC’s definition focuses on unintentional risk

    • Which overlaps with op-risk by Basel:
      The risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. This definitions include legal risk, but excludes strategic and reputational risk

  • OCC includes system risk in strategic risk

    • Basel includes system risk in op-risk (which excludes strategic risk)