In a world full of risk, it pays to have a range of tools in one’s mental toolbox for analyzing and assessing threats which may arise and their potential impact.
The Awbury team firmly believes that looking at, or framing an issue using one particular approach is both misguided and dangerous. The consequences of trying to fit any risk into a particular model tend to be ruinous in the tail.
So, we are intrigued by a risk identification and ranking system now called “CARVER” (as “CARVE” became “CARVER”), recently highlighted in the Harvard Business Review, which stands for:
Criticality- how essential is “x” to a particular business or entity (which could be yours)?
Accessibility- how vulnerable is “x” to attack or threat?
Recoverability- if “x” were impacted, how quickly would a business or entity recover?
Vulnerability- how well (or not) could “X” withstand an attack or threat?
Effect- what would be the consequences of a failure of “x”?
Recognizability- how easily identifiable is “x” by an adversary or competitor as a valuable target, or particular vulnerability?
The system was developed during WWII by the OSS (a precursor of the CIA) to provide French resistance forces with a means of target identification; and was further refined during the Vietnam War by US Army Special Forces to rank targets. Of course, these are “offensive” uses, but the approach can also be used defensively as a more systematized form of SWOT-analysis.
In its simplest form, one ranks each of the six factors described above on a scale of, say, 1 to 5, from “unimportant” to “critical” to build an aggregate score. This can be used in isolation to give an idea of robustness or vulnerability; or, if multiple components are included, to provide a rank-ordering between them. In the latter case, it could be used, for example, as means of budget allocation. Alternatively, it provides a framework for thinking about the risks that a corporate obligor might be most vulnerable to and which might, therefore, lead to default and bankruptcy.
One advantage the approach offers is that it requires a systematic assessment, with little room for “fudging” the outcome if it is used rigorously and objectively. Of course, it does involve judgement (which can be flawed or tainted by bias), but it also requires a justification to be provided as to why a ranking might be a 1 not a 5 for each factor. Rationally, it would form part of a team approach, in which individuals would each assess and create their “CARVER score” for a particular risk, with a radical difference in outcomes being, in itself, a valuable fact.
Like any model, one has to be careful that its form and content do not somehow lead to the need to “fit” everything within it so that there is a definitive “correct” answer. However, the simple use of the 6-factor checklist can lead to the teasing out of issues that might otherwise be avoided or overlooked.
At Awbury, we are always focused on ways in which we can maintain our edge in the identification, understanding, assessment and management of risk, and CARVER provides another means of doing so.
The Awbury Team