In 1997, after spending more than one-half billion dollars in development and after extensive test marketing, Procter & Gamble in partnership with Frito-Lay and Nabisco launched a series of snack food products made with Olestra, a "no fat" substitute. The campaign launch promised that consumers would enjoy the same flavor of potato chips or crackers, but with zero fat. Although touted as a miracle product, Olestra faced a number of uncertainties: ultimate consumer demand, willingness to pay, and pricing; product cost, quality, and shelf life; regulatory approval; and, most important, medical side effects (stomach cramps and the ugly specter of diarrhea in some consumers).
Use this example and other management cases discussed most every week in the business press to make a list of the many categories of risks faced by managers. In particular lines of business, what categories of risks are the most crucial for the firm's profit? Provide examples of firm strategies to eliminate, mitigate, or insure against these risks.