Resilience:: foundation for a sustainable model


Resilience risk complexity uncertainty graphicOrganisational restructuring, talent shortages, and greater technology risks are some of the key transformation-driven risks for the rest of the year ahead, according to PricewaterhouseCoopers‘ latest Risk in Review report.

According to PwC ‘change’ is now happening among the more enlightened…but who are they, where are they and how the hell did the break-out from the thinking that has been a major contributory factor in the run-up to ‘financial meltdown’!

Businesses can use horizon scanning and early-warning systems to spot trends, and employ stress testing to identify key vulnerabilities. More flexible risk appetite statements, corporate-wide contingency planning and a risk-aware corporate culture that challenges conventional wisdom are all powerful tools that can help organizations better manage emerging risks.

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‘Systems Thinking’ isn’t about change for change’s sake and if/WHEN someone tells you that it is I would encourage you to question their motivation and knowledge!

John Wenger explains WHY in this, typically well-crafted and informative article…

quantum shifting

A poll in October of 2011 put the approval rating of the US Congress at just 9%.  When Rasmussen pollsters asked Americans if they approved of the US going communist, a full 11% said they were OK with that; two points ahead of Congress.  To put that into context, during Watergate Richard Nixon’s approval rating was 24%. BP, during the Gulf oil spill, hit 16 %.

To me, these figures illustrate the erosion of trust in those who set out to lead us and, I suspect, an erosion of faith in the systems that puts those leaders there.  It’s not just a crisis of democracy, it’s a much wider crisis of leadership: in government, in business, in churches.  The expenses scandal in the UK.  Widespread sexual abuse perpetrated by Catholic priests and covered up by bishops.  Credit ratings agencies giving the thumbs up to banking systems at the heart…

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The need to get proactive:: IBM on ‘Complexity and risk’


I may not entirely agree with the conclusions but it is difficult not to agree with the IBM introductory problem statement

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It is little wonder that the services of firms such as IBM are so costly. Because they invest a huge amount in research such as this…only for it to fall on ‘deaf ears’, closed minds and lose out to blind faith in practices that few “on the inside” dare speak-out about or question. EVEN when preserving the status quo with artifice and lies… CREATES AMBIGUITY (A SOURCE OF COMPLEXITY), INCREASES RISK,  FEEDS VOLATILITY AND ADDS TO UNCERTAINTY…in an already VUCA WORLD

UK insurance ‘dissected’


I felt compelled to respond to some comments that were prompted by a previous article:

IBM Insurance:: does the industry really care what customers want? I wonder…

The following comments come from a, highly experienced and senior, former insurance executive, who now works for one of the major Global Consulting firms. Obviously I wouldn’t name names without first gaining the approval of the individual in question but I really wanted to share my thoughts. After all that’s why I blog.

For many years I have eagerly anticipated some meaningful debate with thought leaders, passionate or concerned people from within the insurance industry. But I have been, consistently disappointed. I wish I was more confident that these views might spark some meaningful discussion…but I won’t hold my breath!

The comments:

I think David Wilson is making the point that despite the results of the IBM survey, he’s seeing little action from the UK insurance industry. I think at the moment UK and Western European insurers have their hands full with Regulation – Solvency II, RDR – and this is diverting their attention.

Even so, in terms of innovation, UK insurers (or at least Northern European insurers) are seen as leading the global pack in terms of capital effectiveness and optimisation, with the North American market looking to UK as an example of best practice especially in the area of risk management.

My response:

What are the key issues identified:

  1. Compliance with additional Regulation – brought about by cultural, operational and regulatory failures
  2. UK & Europe seen as innovation leaders – based upon the above, should this be the case? And,
  3. capital effectiveness and optimisation – are these correct metrics for innovation and compliance?
  4. risk management – where is the evidence of “best practice”? – I see plenty of evidence of “bad practice” that has become ‘accepted practice’ across the industry. What are current practices in relation to complexity, business resilience and systemic risk?
    Insurance and banking have convinced themselves that they have been/are innovative but, if this is true, why are they the least trusted and most complained about industries according to their customers? Does that not explain the perceived need for more regulation?

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Risk STILL isn’t optional: nor is the truth!


Where are the “risk leaders”?

Instead of FS compounding the problems we should be utilising our expertise and resources to establish a means of “repaying” society, by promoting, supporting and investing in building community resilience.

EVERY project, process, task, operation being undertaken by an organisation is reliant upon varying degrees of INTER-CONNECTED process that (often unseen) underpins function. Each contains some degree of risk.

The more complex the process or product the greater the exposure. Risk does not ‘run parallel’ to function, it is inherent to it and, as such, RM cannot be viewed as an option or add-on! To me this, scarily common and naive perspective serves to reinforce the need for a paradigm shift in Corporate culture.

I have revisited this old article for a couple of reasons. Firstly, (even though I say so myself) I thought it rather good! Secondly, I am seriously concerned that, where there should be “thought leadership”, there are, instead, clear signs that in some quarters a, subjective, consultancy-led approach is preferred to a rigorous, quantitative, analysis of business exposures!

This despite IRM, in a paper issued last year [Risk Appetite & Tolerance], advocating a more quantitative approach. In their accompanying webinar they offered a timeous reminder of Board level responsibilities:

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