Since starting Lootok, once a year I go to Rochester, Minnesota, my home State, to take my annual executive physical at the Mayo Clinic. It gives me a good reason to get back to Minnesota to visit family and friends, while maximizing my medical checkups. In just two days, more than fifteen doctors evaluate me. Risk management shares many similarities with the medical field, and it’s where you find the best analogies and metaphors. I wanted to share few of the insights I have gleaned over my time at Mayo.
Risk management is analogous to the immune system. It is not a thing or part. It is a system that co-exists within other systems that must properly function with a larger system called the organization | organism. You cannot just fix the immune system, buy it, or expect miraculous resiliency overnight. The immune system must be earned, strengthened and maintained every day. You need healthy habits, positive attitude and healthy living and work environments, proper planning and long-term vision and dedication, so forth. Risk management works the same way. Risk management also has the same challenges as our immune system: we don’t think much about it until something goes wrong.
My colleague Christopher Rivera attended an inter-agency exercise where he had a few heated discussions on the topic. He argued in favor of a decentralize model with centralize support (Lootok’s philosophy), whereas a number of his colleagues at the table argued for dedicated central crisis management team that did everything. His colleagues at the table believe in Power to Center, where Lootok believes in Power to the Edge.
The desire to centralize is our natural predilection to try to simplify things and codify procedures to create predictability and reduce errors. The problem with Power to Center, an autocratic centralized model, is that it requires control, prediction, time, and universal knowledge of everything. Unfortunately, control is not possible in complex adaptive environments where there are many independent actors. Control requires prediction as well adequate levers of manipulation. Both requirements are in little supply in the crisis environment. Time is always working against us in today’s global 24/7 environments. In global organizations, knowledge of the local environment and threat effects are necessary to be able to optimally manage and respond to a spectrum of threats. The centralize desire to take the human element out of everything, which is the most important factor in the equation, is almost irresistible.
In complex environments, orderly processes and centralized decision making are ineffective. We also can’t codify a set of procedures for a nonlinear complex event because we have to take the context into account. Independence and improvisation are essential. Decentralize structure (local, country, regional) works best when the threat is within the leadership command and control accountability and responsibility.
I appeared on Federal News Radio and shared my thoughts on new approaches to risk management and how to develop an effective approach to business. You can stream the recording for free here: Interview with Sean Murphy
Look forward to hearing your thoughts and comments!
Chris de Wolf (Mars) and I got back together in April at the RIMS’16 conference for an overwhelmingly well-received session where we talked about transforming the risk function from a program to a business.
“Shaking up the Status Quo - Innovations in Risk Management” gave us the opportunity to tell the story of how we reinvented risk management - business continuity. Long story short: We were looking for a better way.
“I have come to the frightening conclusion that I am the decisive element. It is my personal approach that creates the climate. It is my daily mood that makes the weather. I possess tremendous power to make life miserable or joyous. I can be a tool of torture or an instrument of inspiration, I can humiliate or humor, hurt or heal. In all situations, it is my response that decides whether a crisis is escalated or de-escalated, and a person is humanized or de-humanized. If we treat people as they are, we make them worse. If we treat people as they ought to be, we help them become what they are capable of becoming.” - Johann Wolfgang von Goethe
Lootok began at the end of my corporate consulting career ten years ago. The company I worked for was facing yet another management regime change, and I was at a point where I just could not take it and its inevitable political alliances, new taglines and mantras, unrealistic goals, and working 70 hours a week without recognition. We had a saying around the office: “The beatings shall continue until moral increases.” I finally called bull$%*& and starting saying and doing what I thought was right. It was my Jerry Maguire moment, and I was soon shown the door.
We Can Control Everything
We Can Only Influence
We tend to believe the more control we have over something, the better. And why wouldn’t we? Control gives us predictability. It’s efficient. It stabilizes. It makes our lives easier and heck of a lot less stressful.