Colin Fraser
Director at i-confidential
An issue of Harvard Business Review (HBR) had a spotlight on managing risk and resilience. As always, HBR provoked me into thinking differently about aspects of risk management that are ever present.
The concept which struck me most was the “risks you can’t foresee”. The “novel risks”. The “Black Swan” event.
The question asked was: What to do when there’s no playbook?
Clearly, Covid has impacted the world beyond anybody’s expectations and few, if any, organisations, governments, or businesses had an adequate playbook.
Equally, we all know of cases where an organisation has envisioned a risk, but made the decision not to invest in the required capabilities to cope with the impact because the risk seemed so unlikely. Every business manages risk and makes these sorts of decisions constantly.
So, how do we cater for the novel risk? Something unimagined or so unlikely as not to be worthy of investment in any protection or recovery capability.
Without getting into technology solutions and advanced analytics, we need to encourage people to look out for anomalies and have an enquiring mind. We need to promote an environment where we don’t automatically shut down issues because they seem “unlikely” or “harmless” when first discovered. We need to create a culture where people can voice their opinions and thoughts.
Decades ago, Toyota introduced the “5 whys” at the heart of their problem solving.
Let’s develop our equivalent for anomaly investigation and avoid a black swan. Ask the question, “What if?” and follow this up another four times, with each subsequent answer becoming the subject of the next question. In the HBR spotlight there are a number of real-life case studies where asking a series of “what ifs” would have changed corporate history.
Let’s also make sure that we have some people around who naturally worry about things. The HBR article coins the phrase “Chief Worry Officer” and describes this as the person who quickly recognises a novel risk and mobilises a response in real time.
It’s maybe time to make sure we have a few more worry officers dispersed throughout our business operations and praise them for frequently asking, “What if?”
During the 1940s, an advertising executive, Alex Osborn, was developing the concept of brainstorming. He stated, "It is easier to tone down a wild idea than to think up a new one."
To identify a black swan requires the same conceptual approach – multiple people thinking up ideas and a principle that no idea is too fanciful. Let’s apply the approach to the anomalies picked up by our chief worry officers and get a group of worry officers to work off each other in “what if” sessions.
We probably need to think of success criteria, which may vary according to organisational culture. Alternatively, we just accept that we can’t measure this new core competency of “worrying”.