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June 01, 2006Looking for Risks in all the wrong places?
Risk Management is all about unidentified risks that can pose a major threat to your organization or result in significant opportunities being missed. Frequently just after a failure, loss, blunder or catastrophe we discover in hindsight that the facts have been staring us all along in the face, but they have been either ignored or overlooked. Why is that?
A great article, Long history of intelligence failures responds to this question based on the military intelligence blunders from the wooden horse in Troy to the Yom Kipur war, Pearl Harbor, 9/11 and the Iraq War. I have adapted the article's categorization of these risk failures in a way that I think we can all easily apply to our own business challenges:
1) Overestimation - a determination to overemphasize information, leading to a false conclusion.
2) Underestimation - business analysts or leadership completely misreads a competitor's intentions or market event.
3) Over-confidence - bad assumptions based on our own certainty on how we would handle the situation.
4) Complacency - something is going to happen, though not sure what or when, and yet no action is taken.
5) Ignorance - When there is virtually no intelligence, we are at the mercy of events.
6) Failure to join the dots - failure to make connections between bits of intelligence to make a coherent whole.
Enterprise Risk Management is a proven framework to systematically address these six categories of weakness. My next Blog entry outlines the parallels in the enterprise business world and articulates how Enterprise Risk Management can be effectively used to protect us from these risk process pitfalls.
Posted by stevenminsky in
Enterprise Risk Management
• Risk Assessment
• Risk Identification
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Steven,
You mean to say all above mentioned business challenges can be handled by Enterprise Risk Management Software?
Posted by: Jacob at June 1, 2006 09:15 PM
Jacob,
Absolutely. Software is a powerful enabler for people to effectively address problems that they can not solve on their own.
Steve Jobs once remarked that humans were not as fast runners as many other species, but a human on a bicycle beat them all. Software today is the extension of computers as "bicycles for the mind."
Stay tuned for my next posting where I can go into more detail on how this is achieved for risk and performance management.
Posted by: Steven Minsky at June 2, 2006 09:58 AM
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