As readers of this blog will appreciate by now, at Awbury we are thoroughly paranoid about properly identifying, understanding and controlling risk in all aspects of our business. To that end, we try to keep an eye on what others may identify as “emerging” risks. Of course, such a task is meant to be part of the job description of any self-respecting CRO (and team). However, much of what one reads still resembles little more than a consensual box-ticking exercise: “We’ve thought about is, so everything is now OK”.
In reality, what tends to happen is that a document is created, and then filed away somewhere; to be brought out, when necessary, as evidence of diligent behaviour.
As such, it is worse than useless, because it provides a false sense of security. And if we have learned nothing else in this world, we know that one should never feel secure when it comes to risk management! The advent and outcomes of the pandemic amply demonstrate that!
Another perennial problem within risk management is what we would term “compartmentalization”, meaning that one can neatly classify risks into discrete categories, and so produce labels to summarize them. Checklists do have a value, as we have written before, and are sometimes essential, as long as they are seen as the start of a process, and not an end in themselves. Unfortunately, labelling can also lead to the problem of “framing”: we have defined the risk, and neatly labelled it, so it must fit, and we now understand it fully. As Wittgenstein said: “The limits of my language stand for the limits of my world”. (Die Grenzen meiner Sprache bedeuten die Grenzen meiner Welt). I have “named” it, so that is what it is.
However, the real world is messy, not neat; and one has to be comfortable with managing disorder and often indeterminate continua of outcomes, and acting accordingly. Interestingly, we suspect that in many organizations this may lead, paradoxically, to decision-paralysis in the face of uncertainty, or, conversely, to precipitate action, because: “We must do something!”
Naturally, we are not saying that any of this is easy. It is not. However, it is possible to be better prepared through constant research, wide reading, and continuing dialogue and discussion, with a view to risk identification, scenario planning and gaining an understanding of the realistic boundaries of risk.
The pandemic has been an object lesson in “real world, real time” risk management and mitigation, because it combines scale, speed, reach and uncertainty with behavioral impacts. It is truly a “messy” and evolving event; and one which cannot simply be categorized and “boxed”. Although it is now possible to create some parameters for cause, effect and consequences, one also has to recognize that believing that one fully “understands” the risks is foolhardy.
So, at Awbury, we constantly update our assessment of the risks which the pandemic poses (as well as of the opportunities it may provide in terms of creating new products for our clients) to ensure that we are prepared to deal with any realistic scenarios as the evolve and appear- hence the paranoia!
The Awbury Team