Wanted: Chief Complexity Reduction Officer – Forbes

Please don’t make the mistake that Ron has identified in this article i.e. assume that he is talking about some other company! He isn’t he is talking about yours.

…If your assumption is that complexity comes largely from external factors like globalization and unexpected crises, then your only recourse is to be reactive. And when eventually things don’t go well, pegging the blame on complexity — although convenient — is a high-level form of victim mentality.

On the other hand if you acknowledge that some amount of complexity is self-generated — in the way that we structure and manage our organizations — then you can take action.

The reality is that high degrees of internal complexity significantly reduce an organization’s ability to respond effectively to complex, unanticipated events…

via Wanted: Chief Complexity Reduction Officer – Forbes.

If it wasn’t for the popular myth that the “downside of risk” is something that is exogenous [external] we would have more, better and profitable businesses; more stable economies and less volatile markets!

So, presumably, you expect some kind of justification for this statement?

OK! But rather than spell it out (again – review past blogs) I hope that the following graphic helps:image

How good are we at identifying, admitting and improving upon our own weaknesses?

You are probably familiar with the saying “prevention is better than cure”?

    • – when did you ever hear an insurance company actively and consistently promote a message that, obviously, is beneficial for both parties?

I suspect the answer “never”. Why?

Because, IF business owners were to take greater responsibility for the most common sources of risk the market for selling policies that focus upon RISK PROTECTION, suddenly contracts…not good news for the insurance industry.

I am NOT suggesting that insurance isn’t useful or that external (exogenous) risk doesn’t exist but I DO want to pose the questions that “professional advisors” are unlikely to ask…because (1) it doesn’t pay them or their employers to ask (2) they are ill-equipped to answer or address.

Accepting, instead of outsourcing, responsibility is the start of a process that can transform the profitability, effectiveness and resilience of a business as well as reducing and managing the “total cost of risk” (TCR) i.e. insurance, risk management.

Who do YOU think is best placed to protect the financial well-being of your business? Who do you trust?

Conventional risk management cannot identify, measure or map Complexity so management is “problematic”! Here are the options that you should be able to weigh-up now that you are better informed about the unknown risk exposures that insurers have to deal with, in the most turbulent economic climate in our history:

spend on, insurance, RISK PROTECTION (plus risk and complexity management) OR invest in a culture of LOSS PREVENTION and (re)build business RESILIENCE

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