Not that long ago, whenever we talked about risk management, we thought about it in terms of currency or interest-rate hedging, and it didn’t go much deeper than that. But now we’re talking about risk management for a whole business, and we’re picking up financial and operational risks, even environmental risks.

From an education provider’s point of view, there are a lot of programmes being developed now in risk management. Traditionally it came out of either hardcore finance with a very narrow application, or it came out of actuarial studies, which had a much different type of focus – it’s more about insurance underwriting.

Nowadays, corporate boards are looking at it in the way that they need to understand what risks my business is exposed to across that very broad spectrum, so that we can try to put in mechanisms to preserve the business if things go bad.

One of the big things that came out of the global financial crisis (GFC) was not so much the surprise, because we could see something was coming, but the intensity of the impact. There were about six weeks in September and October 2008 when nobody knew what was going to happen. It was a bit like being paralysed.

If I compare that to what the global market is dealing with now in Europe, where we’ve got Greece in very dire circumstances, and with a couple of other countries not far behind – at least we know what’s going on. Nobody’s got the perfect solution, but there are a number of viable solutions and then you’ve got some political considerations – some more palatable and some less so – but at least there are some strategies and plans.

Nobody really knows what caused the GFC. We do know there were certain contributing factors and one of the most powerful factors – and this is not a very new idea – was greed. It’s a human characteristic. We also know that a big part of the meltdown is attributable to derivatives. And we also know that derivatives are very complicated instruments and often, inside the banks, even the experts who created and traded derivatives didn’t know what was going on.

So we had a very volatile combination – very powerful motivators with the greed, because you can make a lot of money for your firm using these instruments, but also that means a lot of money for the individual through bonuses, in combination with a product that is not very well understood, and certainly not understood well enough to put appropriate governance structures in place.

In the banking point of view, we take calculated, considered risks. So you need people who have deeper thought processes, rather than those who are bedazzled by the possible short-term gains. It varies from organisation to organisation, but the big institutions, for the most part, would not encourage that high-risk-taking behaviour, because in the end, it can lead to the collapse of the institution. Unfortunately, we have several examples of that in recent years.

Flipping over to the marketing and sales side, sometimes certain types of products and certain sectors are really hot. And the salesmen are the same [as high-risk takers] – they just move to the hottest products or sectors. They are a very mobile workforce that will relocate themselves to where they think they can make a buck.

It seems that at the moment we’re in a period of risk aversion. I think that’s healthy, but we won’t always be in that mode. Right now, there’s just too much uncertainty. Hence, you need good risk management.

Another big issue is international perspective. That’s less of an issue for Hong Kong or for Australia, because these locations have had a global perspective for decades. But this is a big issue in the United States.

Yes, parts of the US have good practices and a global view, but other parts have a much narrower view. But you can no longer go on a sort of isolationist mode and expect things to be okay. It’s just not going to happen, because there’s so much capital mobility now, and there’s so many government bonds floating around. There’s a great level of interdependence that I think has increased even more in recent times.

Also, we have to ask what constitutes true leadership. I think there’s a shortage of good leaders. A big part of being a good leader is knowing yourself, and having a very clear view on role and purpose, both at the individual and institutional levels. Why does my firm exist? What’s its reason for existence? This idea of the role and purpose for a company is really fundamental.

Getting back to leadership, I think it has applications at a personal level as well – figuring out what’s valuable to yourself and how you can make a contribution. This covers both family and community settings, and then getting a balance. It seems that the really outstanding leaders that we look at favourably in history are the ones who have these balances, and the dangerous ones are the ones who are too narrow.

Like all of the top business schools, we are constantly improving what we do. It’s like a natural evolution – some things are coming into a programme, others things are coming out, and you wouldn’t really notice a lot of change. That’s happening in the background all the time.

What we’ve observed over the last five years or so is that most of the leading business schools have made significant reforms to their programmes in response to market developments. But in the end, our role and purpose is to help develop global leaders of the future, and they need to have knowledge and training required by the market, which is telling you it wants more emphasis on leadership or risk management. And we’ve got to respond to that because that’s what your role and purpose is.

A big part of the learning experience is being exposed to other smart people, so our strongest screening is on quality. I don’t think you can screen for leadership, because people have very different styles. It’s not to say one style is better or worse than another style. And sometimes there are hidden talents – the students actually don’t realise that they’ve got that potential.

One of the benefits of doing these programmes is that students get some thinking time and they can reflect. It’s very rare for somebody to come in with good training in everything.

Students coming in are usually strong in one or two of the six core disciplines, so they are deliberately exposed to the other four. And that challenges them – it changes the way they think. Quite often, it changes the way they view the world and themselves. They’ve learned some really useful tools, but it’s also repositioning them on how they can use those tools and where.

I would actually be a bit concerned about even trying to filter on what we judge as leadership, ability or talent, because I think it can be very hidden. And it only emerges during the programme and when the students are under stress as well. True leaders are very calm and considered under stress. It’s very hard to test that outside of a genuine stressful situation. We do try and get diversity in the programme – gender, cultural, age. We don’t want a roomful of stereotypes, because that will narrow it down.

It’s really important to understand that there are MBAs and there are MBAs. There are at least 12,000 business schools around the world offering MBA programmes – and that’s before you start counting professional organisations.

You’ve got to view it in the context of an investment. You get what you pay for. Among the elite schools, the quality of the instruction you get is a given. But the quality of your classmates – that is the really big factor. The people who are prepared to make the sacrifices, both economically and in terms of time – these are seriously smart, highly motivated people. And if you are also a seriously smart, highly motivated person, these are exactly the sort of individuals you’d want to sit around the table with.

To get that concentration of intellectual horsepower, common interest and receptivity to learning in a small group, to get that intensity of experience outside of that sort of framework – I don’t know of any other way you can do it.

There is still a shortage of leaders around the world – has been for a long time and probably will be for a long time ahead. So my philosophy on this is that I would encourage people to do their homework and apply to the best schools they can possibly afford. Because we need good leaders – our communities need them, our industries need them.

Frankly, I think a little bit of elitism is good, I think it’s healthy – not too much, just a little bit. If that can attract some people who have a dream of doing something spectacular, then you want them to stick up their hands. Hopefully, that’s good for them and it’s good for their employer, the community or the government.

Professor Mark Stewart is the academic director for MBA Programs at the Australian Graduate School of Management (AGSM), which is part of the Australian School of Business at the Sydney-based University of New South Wales

As told to Rex Aguado