How Intelligence Processes Help Rethink, Manage and Respond to Risk and Uncertainty

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How Intelligence Processes Help
Rethink, Manage and Respond to
Risk and Uncertainty
A Complimentary Webinar from Aurora WDC
12:00 Noon Eastern /// Wednesday 6 May 2015
~ featuring ~
Geary Sikich Dr. Craig Fleisher

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Questions, Commentary & Content

Geary Sikich
Author, Expert, Advisor
Geary Sikich is an experienced senior executive; at a strategic and
operational level, with strong track record in developing, driving and
managing business improvement and development, risk management,
contingency planning and competitive intelligence initiatives. Geary is
the author of over 325 published articles and four books, his latest
being “Protecting Your Business in Pandemic,” published in June 2008
(available on Amazon.com). Geary holds a M.Ed. in Counseling and
Guidance from the University of Texas at El Paso and a B.S. in
Criminology from Indiana State University.
Connect with Geary via:
Web: http://www.logicalmanagement.com
Email: g.sikich@att.net or gsikich@logicalmanagement.com
Telephone: 1 219 922-7718
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Goal:
Better understand how competitive
intelligence processes and practices
(capabilities) can contribute to augmenting
risk absorption capacity, risk buffering,
overall risk management and strategy
execution.
Agenda

What is Risk?
Some Facts to Consider:
 Risk is not static, it is fluid
 Risk probes for weaknesses to exploit
 Risk can only be temporarily mitigated
 Over time risk mitigation degrades
Currently risk is estimated by postulating hypothetical
future states of the world.

Risk Absorption Capacity
Definition:
“An organization’s ability to survive the
uncertainty of risk realization”
Risk absorption capacity recognizes that not all
outcomes will occur with known or estimable
probabilities

Risk Saturation Point
Definition:
“That point at which an organization’s capacity
to absorb risk (either positive or negative)
exceeds its capabilities; thereby creating and
inability to sustain risk exposure”
According to ISO 31000, risk is the “effect of uncertainty on objectives” This
definition recognizes that all of us operate in an uncertain world and
leverages this by adding that “Uncertainty (or lack of certainty) is a state or
condition that involves a deficiency of information and leads to inadequate or
incomplete knowledge or understanding. In the context of risk management,
uncertainty exists whenever the knowledge or understanding of an event,
consequence, or likelihood is inadequate or incomplete.”

Risk Deflection
Definition:
“An organization’s ability to create risk parity
through risk buffering to deflect the impact of
risk realization”
Mitigating risk does not mean that risk is eliminated. It means that the
enterprise is buffered against the risk exposure. Buffering risk must be a
constant process to adequate protection based on the current situation.
Risk parity is an approach that focuses on the allocation of risk, usually
defined by exposure, velocity and volatility rather than allocation of assets to
the risk. When asset allocations are adjusted (leveraged or deleveraged) to
the same risk level, risk parity is created resulting in more resistance to
discontinuity events.

Risk Explosion
Definition:
“The impact (either positive or negative) on
organization’s ability to balance risk
realization resulting in greater risk awareness”
Deflecting risk and capitalizing on risk explosion needs to be the next step for
organizations as they begin to pursue forward-looking risk management
strategies that emphasize a recognition of touchpoints, cascade potentials
and the need for engagement with government, their “value chain”
competitors and communities.

Connect the Dots
 Assumption # 1: Modern business and government organizations
represent complex systems operating within multiple networks;
 Assumption # 2: There are many layers of complexity within
organizations and their "Value Chains";
 Assumption # 3: Due to complexity, active analysis, risk buffering, risk
parity, cascade analysis, etc. of the potential consequences of disruptive
(positive and/or negative) events is critical to survivability;
 Assumption # 4: Actions in response to disruptive events needs to be
coordinated with all touchpoints;
 Assumption # 5: Resources and skill sets are key issues that need to be
recognized and addressed.

Connect the Dots

“You must acquire the
best knowledge first,
and without delay; it is
the height of madness
to learn what you will
later have to unlearn”
Erasmus of Rotterdam
Erasmus and the Swan

Viscount Mumbles
Often would a deaf man know the
answers had he but the faculty of
hearing the questions.
Likewise would the unimaginative
man guess wisely at the answers
had he but the wit of posing to
himself the appropriate questions.
Information Overload = Partial Awareness
What are You Failing to Notice?

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Collect
Collate
Analyze
Validate
Distribute
Control
Information, no matter how well managed, is not knowledge unless it can be
used. Geary W. Sikich, 2002
Information Management
Vertical and Horizontal Integration

“The availability of data and the ability to access
information far exceeds our capacity to digest the
information and develop it into meaningful and useful
intelligence that can be actionized by decision-
makers” Geary W. Sikich, 2003
Information Overload
Intelligence collection and assessment requires a
broad based effort from all elements of the
organization.
Vertical and Horizontal Integration

Concluding Thoughts
Currently risk is estimated by postulating
hypothetical future states of the world.

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 Techniques for identifying permanent versus cyclical changes in
the external operating environment,
 Techniques for spotting and buffering risks so that the
organization has the ability to leverage risk management
activities for competitive advantage,
 Tools for stimulating the creation of options, particularly where
change is occurring rapidly and the scope for risk management
action is shifting,
Seven Identified Needs

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 Tools for stimulating the understanding of opaque risk forces that
are truly dynamic, with multiple orders of consequence effects,
 Proven tools for improving strategy, risk management, business
continuity and competitive intelligence processes, breaking
inertia, and jolting conventional risk management thinking.
 Techniques for generating and harnessing insights from big data
about risks that customers, competitors, and suppliers present to
the organization,
 Techniques for identifying and focusing the top team’s attention
on new or poorly understood risks—before it is too late and the
risk materialize (risk realization).
Seven Identified Needs

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 Interconnectedness: Opportunities for risk contagion (geographic,
category, geopolitical);
 Asymmetry: Small events that can create disproportionate and
unexpected effects;
 Time Compression: “Just in time” processes have little leeway
with effects of risk realization being felt rapidly;
 “Noise”: Salient facts that are not noticed at the time of event
(failure of critical thinking);
 Information Vetting: Misinformation or inadequately provided
information that has not been properly validated can lead to
greater risk exposure and skewed responses.
Five Factors Affecting Decision Making

“90% of the information used in organizations is
internally focused and only 10% is about the
outside environment. This is exactly backwards.”
—Peter Drucker
"We're living in a world where we need to
completely understand our environment and then
look for anomalies, look for change and focus on
the change.“
—Admiral Mike Mullen, 17th Chair, Joint Chiefs of Staff
Sobering Thoughts from Two Experts

Geary W. Sikich
Principal, Logical Management Systems, Corp.
http://www.logicalmanagement.com
gsikich@logicalmanagement.com
g.sikich@att.net
+1 (219) 922-7718
“If you keep doing what you’ve
always done – you’ll keep getting
what you’ve always gotten.”
"From a thousand fragments
renewal is achieved, but
only if you are prepared to
pick up the pieces"

How Intelligence Processes Help Rethink, Manage and Respond to Risk and Uncertainty

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