/* ---- Google Analytics Code Below */

Friday, March 27, 2020

On Novel Risks in the Enterprise

Something we studied in some detail, solution was to have sufficient knowledge and resources, internal and access to external to be able to address the context of such problems.   Making them less 'Novel'.    Not sure how well that works in the current situation.

Novel Risks   by Robert S. Kaplan, Dutch Leonard, and Anette Mikes  in HBSWK

Companies can manage known risks by reducing their likelihood and impact. But such routine risk management often prevents them from recognizing and responding rapidly to novel risks, those not envisioned or seen before. Setting up teams, processes, and capabilities in advance for dealing with unexpected circumstances can protect against their severe consequences.

Author Abstract
All organizations now practice some form of risk management to identify and assess routine risks for compliance—in their operations, supply chains, and strategy, as well as from envisioned external events. These risk management policies, however, fail when employees do not recognize the potential for novel risks to occur during apparently routine operations. Novel risks—arising from circumstances that haven’t been thought of or seen before—make routine risk management ineffective, and, more seriously, delude management into thinking that risks have been mitigated when, in fact, novel risks can escalate to serious if not fatal consequences. The paper discusses why well-known behavioral and organizational biases cause novel risks to go unrecognized and unmitigated. Based on best practices in several organizations, the paper describes the processes that private and public entities can institute to identify and manage novel risks. These risks require organizations to launch adaptive and nimble responses to avoid being trapped in routines that are inadequate or even counterproductive when novel circumstances arise.  .... 

Paper:  http://www.hbs.edu/faculty/pages/download.aspx?name=20-094.pdf 

No comments: