Uncertainty & Risk Management: Positioning Strategically


This post will lay out my thoughts on how to approach strategically preparing for uncertainty and risk (U&r).

Risk is something we know quite a lot about. We understand and appreciate the risk event (e.g., heads or tails, collisions due to excessive speeds, etc.). We understand and appreciate the consequences (e.g., win/lose, level of harm, etc.). And, we understand and appreciate the nature of the event’s likelihood (odds). What makes an event a risk like one is it is not really a surprise – we knew it could happen beforehand.

Strategically we approach managing risk through two themes: working the likelihood of its occurrence (make something safer, operational redundancy, etc.); dealing with the impacts of the consequences (insurance, savings, on-hand replacements, etc.)

Uncertainty is what we don’t know much about. in fact we may not even be aware of (black swans). Because of this we will be unprepared for the full impacts of the event occurance. This figurative blindness makes the notion of “management” almost an oxymoron. Fortunately there are two thematic approaches we can take.

First is of course to make some of the “black” opaque (or grey). This is the determination to at least be less blind because we work at finding what is knowable by effort. This is the act of reducing wilful or “through denial” blindness. In OD work there is a very straight forward approach we can take to achieve this: the use of dynamic stakeholder analysis. This builds on the notion that most strategic U&r events arise from social sources (N.B. does not deal with engineering like U&r sources – we have engineers to help us here).

We can also do things to manage our “exposure to the consequences of these surprising events. We can do things to makes us more anti- fragile. I am borrowing this notion from Nassim Taleb (Fooled by Randomness and The Black Swan fame). These are the actions we can take beforehand to not only be resilient/robust in the face of such events, AND, also enable us to be opportunistic about them. traditional OD as it applies to handling change focuses on resilience (i.e., survivability, co-pability, etc.). being anti-fragile means you can also take advantage of the opportunities within uncertainty’s events.

Taleb in his latest book titled Antifragility in table 1 lays out some of his thoughts on what these strategies could include. I recommend that all OD practitioners who are in the change implementation field study this book and build on Taleb’s Table 1 insights. I know I am.

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About 123stilllearning456

As a management consultant I am passionately interested in talent management and risk/uncertainty issues. In the area of talent management I propose that we seek strategies that look beyond the staffing/employee centric frames of reference. I have been frustrated at the "closing down on possibilities" by these more conventional staffing/employee centric approaches. I have been impressed where people have found systematic solutions to their talent management issues by going beyond the conventional approaches. In the area of risk and uncertainty, I am interested in making this topic relevant to more normal decision making situations. My conceptual foundation is to use the micro-economist's fixed/variable cost theme. I also think it is important to look at these issues for people through their emotional and psychological lens. As a premise I think risk and uncertainty only exist where there is a person who cares about possible events and its consequences. Hence, risk and uncertainty are social based concepts (no sentience, no risk and uncertainty). A major influence on my thinking in this area is Nassim Taleb of "Black Swan" fame. This BLOG provides me with an opportunity to express my thoughts on topics that interest me. As this is an online diary, content is more important to me than polish. I apologize if this distracts from readers' enjoyment and learning. Still I find this a useful way to live up to my namesake, learn more from others and hopefully provoke creative thoughts and ideas in others.
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