McKinsey · Ideas & Institutions
TIER 4 Sat, 19 Apr 2025 16:38:00 +0000
Prepare for second-order effects | | | | --- | | | | | | --- | **Share this email** | | | ---|---|---|--- | ************ --- | | | | | Share this email on **LinkedIn** --- | --- | | Share this email on **X** --- | --- | | Share this email on **Facebook** --- | --- | | | | --- --- | | TIMELESS INSIGHTS–AND WHY THEY’RE AS RELEVANT AS EVER --- | | --- | | | | | --- | | Brought to you by Alex Panas, global leader of industries, & Axel Karlsson, global leader of functional practices and growth platforms --- | | --- | | --- | | | Welcome to the latest edition of _McKinsey Classics_. We hope you find our perspectives useful. Let us know what you think at Alex_Panas@McKinsey.com and Axel_Karlsson@McKinsey.com. --- | | —Alex and Axel _ _ --- | | | April 2025 --- | | In honor of the 60th birthday of _McKinsey Quarterly_ , the _McKinsey Classics_ newsletter is dedicating a full year to enduring _Quarterly_ articles that were ahead of their time. Enjoy, and check out other celebration highlights such as special themed issues and bonus digital features. --- | | | --- | | ## **Risk: Seeing around the corners** --- | | Today’s organizations face no shortage of risks. But companies that think their problems are limited to the most immediate threats should think again. Indeed, risk managers often fail to anticipate how acute, obvious threats can multiply across the entire value chain and wreak even greater havoc. Consider the global financial crisis of 2008, whose lessons, underscored in this 2009 _McKinsey Quarterly_ classic, can be instructive for global companies today. In the wake of the 2008 crisis, Canada’s currency appreciated 30 percent in value versus the US dollar. Manufacturers in Canada knew the currency change would affect their cost competitiveness in US markets. But what they didn’t plan for was the flurry of cross-border shopping from Canadian consumers, who started purchasing big-ticket items in the United States, which forced Canadian companies to lower their prices at home. The combined effects of profit compression in both Canada and the United States did far more damage than these companies had initially anticipated. Understanding how risk can cascade across a company’s value chain—including its suppliers, distribution channels, and customers—and how it might change the dynamic with competitors is crucial for developing a comprehensive risk plan. For more on how executives can better prepare for second-order effects, read Eric Lamarre’s 2009 classic, “Risk: Seeing around the corners.” --- | | | | | | Identify hidden risks --- | | --- | | | --- | | **Read our latest thinking on this classic topic ** --- | | | | --- | #### **The six habits of highly successful chief risk officers** --- Anticipating and preparing for risks—especially hidden ones—is only part of implementing a successful risk assessment plan. To effectively embed future-ready resilience into the organization, risk leaders can follow the habits of successful chief risk officers, including relentlessly pursuing a guiding principle for risk and resilience and investing in the next generation of risk leaders. Read our latest insights on the topic from Ida Kristensen, Marc Chiapolino, María del Mar Martínez, and Ritesh Jain. **Learn from top CROs** | | | --- | | | | --- | #### AI, data centers, and the energy equation: What leaders should know --- Amid the AI boom, compute power is emerging as one of this decade’s most critical resources. Join our April 23 _McKinsey Live_ virtual event to learn how business leaders can navigate the rapid build-out of data centers, the emergence of new technologies such as DeepSeek, and potential headwinds from the energy sector. **Register ** | | | --- | | _—Edited by Drew Holzfeind, editor, Chicago _ --- | | | --- | | **Is there a classic business topic you’d like us to feature?Send us an email—we’d love to hear from you.** --- | | | --- | | | | | --- | **Follow our thinking** | | | | ---|---|--- | | | | | | **McKinsey Insights** \- Get our latest thinking on your iPhone, iPad or Android. --- | | | | ---|---|--- | | | --- | | **Share these insights ** --- | | **Did you enjoy this newsletter?** Forward it to colleagues and friends so they can subscribe too. Was this issue forwarded to you? Sign up for it and sample our 40+ other free email subscriptions here. --- | | This email contains information about McKinsey's research, insights, services, or events. By opening our emails or clicking on links, you agree to our use of cookies and web tracking technology. For more information on how we use and protect your information, please review our privacy policy. --- | You received this email because you subscribed to our McKinsey Classics newsletter. --- | Manage subscriptions | Unsubscribe --- | Copyright © 2025 | McKinsey & Company, 3 World Trade Center, 175 Greenwich Street, New York, NY 10007 ---