Risk ‘Blindness’ – Part 1 – Identifying the Problem

Risk ‘Blindness’ – Part 1 – Identifying the Problem

Taking the time to recognise whether your organisation has the characteristics that could lead it to be ‘blind’ to emerging risks is a critical exercise. Organisations, like individuals, seem to develop characteristics over time – bureaucratic, disciplined, vulnerable, reactive or proactive being just a few. Sometimes these traits are evident across the organisation, and sometimes only in discrete areas. Explaining them away as ‘silos’ (or ‘cylinders of excellence’ as we have heard them termed) is not a practice that delivers the outcomes required. So how do you know if you have an issue? To begin with, ask yourself the following four questions:

  • Is there evidence within our organisation of an ability for individuals to ‘speak truth to power’? Michael Finer (Previously the Chief People Office for Pepsi) has articulately described the challenges of explaining to their Executives that customers of the business preferred juice products to cola products.
  • Is there evidence of denial within our organisation? Kuhn urges organisations to ‘think the unthinkable’ rather than denying or rejecting items without analysis.
  • Is there evidence of ‘strategic jeopardy’ within our organisation? Organisations have a tendency to pick up additional services or functions that were previously never considered core. These are what Ulrich has described as ‘stupendous initiatives unrelated to customer needs’.
  • Is there evidence of a mis-alignment between strategic objectives & management practices within our organisation? Do we espouse values and intents that state A,B and C to be important – but really judge people and performance on X, Y and Z.

If your organisation has a track record of success, has not tasted significant failure, has invested heavily (financially or emotionally) in the current way it goes about things, struggles with robust decision-making or has settled comfortably into ‘inaction’ then the questions you’ve just asked yourself may not be being amplified to the right level to address emerging risk issues in your organisation.

It is not always easy to have the courage to push against what seems to be an immovable system, and ‘tell truth to power’ or ‘think the unthinkable’. In next month’s email bulletin, we explore what can be done to address the problem. In the meantime, if you have any questions, please contact Riskwest to discuss the issue further.