CEP 21 Unknown Risk Paper V 1 0

560 views

Published on

Uncertainty is the new norm
As the way we interact in business becomes more complex the level of uncertainty increases. Corporate Boards are under intense regulatory, financial and reputational pressure to grapple with the double-edged sword of uncertainty. From a positive perspective, uncertainty creates more opportunities for innovation, but this needs to be tempered with managing an increasing number of exposures as unknown risks grow. It is for this reason, uncertainty about the future is now firmly on the Chairman’s Office agenda within leading corporates. This paper focuses upon taking proactive action in managing unknown risks.

Published in: Technology, Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
560
On SlideShare
0
From Embeds
0
Number of Embeds
12
Actions
Shares
0
Downloads
2
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

CEP 21 Unknown Risk Paper V 1 0

  1. 1. FusionExperience Uncertainty Matters Building Early Warning Systems for Unknown Risks 1|2 FSA fines BAE £30m for Uncertainty is the new norm inaccurate accounting As the way we interact in business records for activities in Tanzania. BEA also fined becomes more complex the level of £256m by USA uncertainty increases. Corporate Boards department of Justice for are under intense regulatory, financial other false statements. and reputational pressure to grapple Source: FT, 5 Feb 2010 with the double-edged sword of Toyota chief is accused of uncertainty. From a positive perspective, being 'safety deaf‘ by US uncertainty creates more opportunities Congress Congressional for innovation, but this needs to be tempered with managing an increasing number inquiry as 39 deaths linked to car accelerator of exposures as unknown risks grow. It is for this reason, uncertainty about the problems. Source: Daily future is now firmly on the Chairman’s Office agenda within leading corporates. This Telegraph, 25 Feb 2010 paper focuses upon taking proactive action in managing unknown risks. FSA fines Standard Life £2.45m for serious Unknown risks need to be managed systems and controls Unknown risks typically fall outside conventional risk and control systems, thus failures Source: FSA , 20 ‘unexpected’ issues are more frequently being handled by the Chairman’s Office. Jan 2010 Unlike conventional risks, unknown risks can be wide reaching with many potential outcomes across the organisation and ecosystem. In the extreme, these risks can lead to systemic exposures deep within the organisation and marketplace. Retrospective regulation such as Sarbanes Oxley removes the safely net of ignorance as a corporate defence against ‘unforeseeable’ events. With the regulatory threat of executive imprisonment and the increasing litigious shareholders, the Chairman’s Office needs more advanced early warning systems of emergent unknown risks. Someone knows The pressure upon the Chairman’s Office is to strengthen their checks and balances in the way in which the business is managed by the Executive, thus turning the spotlight on the Risk Committee, who report into the Chairman’s Office. The reality >> CEP 21 | Decisive actions, definitive outcomes | © FusionExperience® Ltd 2010 | fusion-experience.com | 1
  2. 2. FusionExperience Uncertainty Matters Building Early Warning Systems for Unknown Risks 1|2 FSA record fine for is, that there is a high likelihood that any emergent risk was already known by someone individual reaches £967k; within the corporate ecosystem of people either inside or outside the organisation. The CEO of Genel Enerji, challenge is that the early warning signals are often so weak or not visible to the Turkish oil exploration, Chairman’s Office that issues emerge ‘unexpectedly’. Developing early warning caught dealing shares with insider information. indicators for unknown risks requires a new approach, which will affect the whole Source: Daily Telegraph, organisation. Effective measurement will enable the business to sense and predict 25 Feb 2010 emergent patterns and take necessary actions to mitigate against these exposures. Patients die as NHS trusts The power of ecosystem anonymity miss patient safety alerts. Source: BBC, 16 Feb Employees, customers, partners, suppliers and shareholders all form part of the 2010 organisation’s eco-system that provides a 360º catchment for gathering data intelligence. However, it is important to provide a safe harbour in which to communicate. Anonymity IFA Park Row Associates should be protected to ensure that people provide the most honest and accurate has to pay £7.8m in customer redress. information without the pressure of being identified. Advanced technologies offer the Source: City Wire, 24 Feb ability to gather and understand large quantities of data quickly, in a scalable way whilst 2010 protecting anonymity. This approach strengthens the governance process and stakeholder confidence when combined with positive responsiveness. A common currency of measurement Using different feeling based measurements for each group targeted within an ecosystem enables checks and balances to be inbuilt. This is achieved using a digital survey so each person is asked to assess ‘how’ and ‘why’ they feel towards risk activities within their area of interaction. By underpinning each survey with common structure, a universal currency of measurement can be used. Managing emergent patterns at the edge Advanced interactive visualisation can be used to identify emergent patterns, allowing a rapid way to understand the complexity of the information gathered, providing lead indicators of perceived risks. Informed decisions can then be taken to undertake deeper investigations into the root of the issues. Once further evidence has been captured proactive change can be considered, planned, prioritised and implemented. Intelligence gathered can also be used for predictions and repeatable benchmarking, providing the basis for managing the uncertainties around risk. This repeatable process leads to a greater sense and respond capability for managing uncertainty. Contact us Customer Experience Beyond one method Freddie McMahon t:/ + 44 (0) 20 7 084 7500 Meeting the threats of unknown risks means rethinking beyond more conventional risk e:/ freddie.mcmahon@ methods to deal with the increasing levels of complexity and uncertainty. Building early fusion-experience.com warning systems for unknown risks is fast becoming a must have capability. w:/ fusion-experience.com Uncertainty matters! CEP 21 | Decisive actions, definitive outcomes | © FusionExperience® Ltd 2010 | fusion-experience.com | 2

×