The optimization of creation must be complemented with the optimization of the prevention of destruction.
April 14, 1912 the Titanic travelled full speed on a route and at a time when icebergs are to be reckoned with. When her lookout sighted the iceberg, the ship was unable to change course quickly. The ship could stay afloat when 4 of her 6 compartments were flooded, but the iceberg opened 5. What does the Titanic tragedy teach us?
Risk management has been endowed with theory and practice, from Kepner Tregoe’s prevention and contingency models, to Peter Schwartz scenarios, to algorithms that program artificial intelligence, big data, communication systems. Peter Bernstein posited: “The boundary between modern times and the past is the mastery of risk”. Famous last words! There are plenty of tricky risks that fly over the safety nets. Let me mention 3 of them.
-1- Systemic risks! Our world is a system whose complexity expands fueled by technologies, by globalization, by innovations. In 2008 massive investments on shaky models of subprime real estate rocked finance. Will massive investments in cryptocurrencies cause history to repeat itself in 2018?
-2- Black swans! We see what we look at. Taleb pointed out that if we never saw a black swan, we will not be looking out for one. Technologies and innovations are preparing plenty of red herring.
-3- The acceleration of change. Who hasn’t got soaked wet when a storm moved in faster than expected?
The ultimate risk management lies in the implementation of Agile Management, which can endow the organization with the alertness, with the adaptability, and with the agility needed in case of sudden and unforeseeable jolts. As concerns Agile Management, I refer the readers to the papers that I have posted on LinkedIn and to my last book.