Project managers and risk management: A comparative study between Japanese and Korean firms

- We compare the risk management practices of Japanese and Korean firms.
- Korean companies grant project managers more authority in risk management.
- Japanese companies respond to serious product failures more sensitively than Korean companies do.
- Korean companies are more flexible about their risk management.
- Japanese companies focus on 'prevention' while Korean companies focus on 'response'.

In the course of managing businesses, executives constantly face challenging circumstances. For instance, the market reality does not necessarily reflect the intent of a company's management. Disruptive business events may occur that are quite contrary to what the senior management expected. Firms that are ill prepared to deal with risk pay a stiff price. The intensely competitive global business reality calls for aggressive and integrative enterprise-wide risk management. Risk management is a critical strategic and operational priority. It is crucial for firms to define effective risk management practices in the context of volatile competitive landscapes with rapidly changing customer expectations.This article compares the complex risk management practices of Japanese and Korean firms. Specifically, we examine the following questions: (1) How do firms manage overall organizational-level risks as well as project-level risks in the areas of product planning and process design? (2) Are there differences between how Japanese and Korean firms effectively manage risk (e.g. Do they use risk managers or risk management departments or not?), and if so, what are their impacts on management?We find that Korean companies grant their project managers significant authority in risk management in contrast to their Japanese counterparts. We also find that Korean firms adopt a flexible approach to risk management, while Japanese firms adopt a systematic approach, suggesting that Japanese companies tend to focus on the 'prevention' of product-related accidents, while Korean companies tend to focus on the 'response' to such accidents.