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Enterprise Friction refers to the intimate interaction between strategic planning and risk management. The term was coined by Sandeep Vishnu, and executive with New York-based Capco Inc., to describe the need to integrate these two functions which traditionally are separated, in making long-term decisions. The disconnect between risk management and strategic planning according to Vishnu is part of the reason for the exposure to which many organizations - especially those in the financial services sector - fell vulnerable to the sudden and dramatic downturn in the economy in 2008 and 2009. The principle of enterprise friction suggests that companies can in fact be more agile and respond more quickly to changing marketplace conditions when risk management considerations are taken into account before key corporate initiatives are implemented. This counters the common practice of designing business processes first and then assessing risk exposure after the process has been designed. As a result, risk managers are seen as an impediment by strategic planners by exploiting market opportunities. By integrating the two functions, Vishnu contends that during the process design and development phases, companies identify risk elements sooner and produce better and more secure processes more quickly. The principle is analogous to quality assurance practices that have been integrated into manufacturing and software development practices. The friction metaphor alludes to the notion that a basketball player moving down the court in stocking feet will be less agile and effective than the player who has appropriate footwear that provides the appropriate friction on the court. In short, Enterprise Friction can help organizations reduce risk while accelerating the ability to bring new processes to market or redesign existing processes to more effectively achieve organizations objectives.
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