The missing factor in your risk assessment: detectability
Dr. Yossi Sheffi, renowned M.I.T. professor and author of The Resilient Enterprise, recently joined Lootok’s team in New York for a collaborative session on risk management and supply chain resiliency.
Dr. Sheffi gave us a preview into his recent research, explaining a concept that enhances our conventional methods of measuring risk using probability (y-axis) and impact (x-axis). What this x-y axis model leaves out, Sheffi notes, is any consideration towards how long it will take for us to actually feel the consequences of a threat.
When we have encountered the risk before, we can prepare our responses. But when we face something that has never happened before, we don’t know what the consequences of the threat will be like, or how to get a handle on the situation.
Dr. Sheffi introduced a third axis he calls “the detectability axis,” which considers threats you can only detect only after the fact. Examples of threats occurring “after the fact” include things like “sleeping” pathogens, or cyber agents that sit in your computer without your knowledge.
Sheffi has worked with some of the largest companies in the world. Here are a few other key insights being leveraged by leading organizations:
- Know your local authorities. A crisis is not the time to exchange business cards with your local fire chief. If the local authorities know who you are prior to an incident, the less time they’ll need to spend identifying your organization, and the faster they’ll be able to assist you.
- Expertise is greater than rank. Good organizations understand that at some point, experience trumps rank.
- Create teams of “pliable people.” Cross-train your employees to have diverse abilities – this strengthens individuals with new skills, and protects the company from the temporary loss of an employee due to PTO or emergencies.
- Strike partnerships with NGOs. The line is changing all the time, and it’s more critical than ever to stay on top of changing social norms. Fostering relationships with organizations in the public sector can help you tap into understanding groups of constituencies and audiences who may affect your brand.
- The new rule is that all of the old rules don’t apply in a crisis. Rules, policies, and regulations all have their purpose; however, in a crisis, red tape and bureaucracy can often impede the process for finding new solutions – particularly in large organizations.