In the new age of advanced risk, complacent organisations are allowing themselves to become vulnerable to the disruptive forces of the Fourth Industrial Revolution, says founder and principal of Complexus, Warren Black ahead of this year’s Risk Forum Asia Pacific.
In the original 1993 Jurassic Park movie there is a scene where the resident chaos theorist(played by Jeff Goldblum) warns the others that tampering with Dinosaur DNA is a mistake as natural evolutionary systems cannot be contained by lab science. Natural systems have throughout history always found a way to break through the boundaries and limitations which have at some time or another constrained them. This is how they have all survived billions of years - as Goldblum put it; “Nature always finds a way”
What Goldblum was actually describing is the complex systems’ phenomena of “Emergence”. Whereby a complex system which has an advanced number of continually transitioning parts will eventually break through its’ environmental boundaries to create new behaviours and phenomena that are not an intended outcome of their design.
In the case of Jurassic Park, Emergence came in the form of the all-female dinosaurs finding a way to reproduce despite the absence of any males. Turns out that hidden deep in their manufactured DNA was the DNA of frogs with A-Sexual reproductive organs, so in the end the lack of male dinosaurs wasn’t an issue, nature simply found another way. The point of this story line was to illustrate how a highly complex natural system (such as Dinosaur DNA), has an advanced number of contributing components which can interact to form an unlimited number of behavioural relationships. Thereby making it impossible to account for all the outcomes that could emerge from within the system.
The phenomena of Emergence means that regardless of the rigour of an organisation’s internal control framework, risk will simply find another way to materialise.
For organisational risk management, the phenomena of Emergence means that regardless of the rigour of an organisation’s internal control framework, continually shifting industry forces will ensure that risks are able to transform and evolve to expose the vulnerabilities of said framework. Consider how in the modern world everything is connected to everything else and all of these relationships are continually transitioning. Therefore every time there is a subtle change in one established relationship, it has the potential to ripple and compound through all the other connected relationships enabling new emergent behavioural variations, phenomena and outcomes.
What this means, is that modern organisations will have to get better at observing and responding to emerging industry changes (external focus), as well as assessing how these changes might take advantage of organisational vulnerabilities (internal focus). There is a certain industry-wide intelligence, responsiveness and agility now required from risk management which has perhaps been historically lacking. In brief, those organisations which fail to embed risk management solutions which allow them to respond positively to emerging industry forces, will almost certainly become ripe for disruption.
To hear more from Warren Black on this topic, be sure you are at this year’s Risk Forum Asia Pacific in Singapore on May 30.