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Understanding the risk environment: Sean Murphy discusses nonlinear environment with Gary Klein

I had the pleasure to interview Gary Klein the author of “Seeing What Others Don’t,” “Streetlights and Shadows,” “Working Minds,” and “Sources of Power.” His research and experience is invaluable to anyone in the field of risk management. In this interview, Gary talks about the difference between a well-ordered domain (i.e., normal business environment) and complex domain (i.e., crisis environment). Understanding the characteristics and attributes of each environment is critical to understanding what tools, processes, and capabilities needed to be successful in each environment.

Well-ordered domains

These environments are structured, stable, and predictable. [you can think of your normal business environment; your annual operating plan] We can think systematically through these settings and environments because we know how they work. We can make relative accurate decisions and estimates. In this type of environments procedures and details plans work well because we do not have to take the context into account. We understand cause and effect. Also we can use orderly processes and centralize decision making because it is relatively predictable - it is not rapidly changing, dynamic.

Complex domains

These are environments that are not structured, not stable, not predictable. We have difficulty thinking through these settings and situations because we don’t know how they work. There is a lot of new information and cues to interpret and become familiar with. Procedures and details plans do not work well in this environment because we have to take the context into account. The risk management environment lives in the complex domain.

Different environments require different tools, capabilities, planning, and plans. In a crisis environment we need situation awareness, common operating picture, common ground, tacit knowledge, threat intelligence, and a decision-making and problem solving framework. We need to be able to learn, unlearn, and relearn as the situation unfolds and our goals change. We need to be comfortable with management by discovery and anticipatory thinking.