complex risk
TRANSCRIPT
COMPLEX ENTERPRISE RISK A Short Introduc-on
There are three categories of risk.
First, risks associated with problems/challenges for which there is a known solu;on that is readily available. The risk is mi;gated by ;mely recogni;on of the problem and applying the solu;on.
Second, risks associated with problems/challenges for which a solu;on is available, but which will require the engagement of specialist exper;se in order to address the situa;on. The risk is mi;gated by ;mely detec;on and analysis of the problem, recognising that specialist help is needed, and quickly gaining access to the necessary exper;se.
Standard risk management systems and protocols, as used by most organisa;ons, are adequate for addressing both these categories of risk exposure.
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There is a third category, however, where no apparent solu;on is readily iden;fiable, nor is there a defini;ve authority source to whom you can turn. Indeed, these problem situa;ons generally tend to sit in the background of normal opera;onal life, and in consequence tend to be ignored. This is because you either (a) feel you have more pressing immediate issues to deal with, or (b) find them frustra;ngly intractable, ;me-‐consuming, or just plain ‘messy’. So, they get ignored or ‘put on the back burner’. Unfortunately, they don’t go away by magic.
Instead, they tend to fester away in the background, emerge from ;me to ;me in different guises, and all the ;me eat away at the produc;ve capacity of the enterprise.
The persistence of silos, low employee morale, strained rela;ons with key stakeholders, poor leadership prac;ce, finding the right work-‐life balance for key role-‐holders, are cases in point. This is the domain of complex enterprise risk. RegreXably, complex problems are the ones that invariably keep you awake at night, increase your stress levels, insidiously diminish your mission-‐effec;veness, and end up cos;ng you serious money. In some instances, as illustrated by Sidney Dekker in Dri$ into Failure, they can result in catastrophic collapse of the business.
Figure 1 following provides a humorous illustra;on of a condi;on that is all too prevalent in many organisa;ons,
even large corpora;ons that consider themselves sophis;cated!
An all-‐too-‐common source of complex enterprise risk ! Figure 1
Volatility Uncertainty Complexity Ambiguity
Fortunately, recent advances in the complexity sciences
have combined to provide us with a new suite of
methodologies, techniques and tools for the ;mely
iden;fica;on, and systema;c unravelling, of the sources of complex enterprise risk.
Dr Robert Flynn Melbourne, Australia
The term ‘complexity sciences’ is used to describe a range of disciplines drawn from the natural sciences, the social
sciences, and the humani;es.
Included in the mix you’ll find such diverse pla\orms as fractal geometry, chaos
theory, cyberne;cs, complex adap;ve systems theory, psychology, sociology, cogni;ve science, and
hermeneu;cs.