Navigating Complexity and Uncertainty with Foresight-Infused Risk Management

Many organisations now embrace the reality of a world driven by complexity and uncertainty, but this has not translated easily into improved capacity to manage strategic risks. In fact, it appears to be more challenging than ever to address the type of change we are witnessing globally in a timely and responsible manner. This is reflected in reports such as the World Economic Forum’s Global Risks Report 2018 and the International Risk Governance Council’s guidelines for the governance of systemic risks.

In the public sector context, risk management is made more challenging by two additional considerations. First, the outcomes affected by risks can often be abstract, leading to difficulties in assessing whether risks have been sufficiently addressed. Second, governments have to manage risks at scale and preserve public trust while coping with the fact that everyone concerned (whether a policymaker or a citizen) is susceptible to a range of cognitive biases.

In the past year at the Centre for Strategic Futures (CSF), we have been exploring ways to better navigate this context by infusing strategic foresight tools and frameworks into risk management at the whole-of-government level. While this is an ongoing experiment, some preliminary ideas have emerged:

1. Strategic risks can cut across time horizons in unexpected ways. CSF generally focuses on the third horizon^[1] space where “ideas or arguments about the future of the system… are, at best, marginal in the present, but which over time may have the potential to displace the world of the first horizon.”^[2] However, near-term events can also create windows for strategic risks to emerge and evolve rapidly. An example of this was seen in the churn of geopolitical events from the past two years, which the Eurasia Group has called a “geopolitical depression”. Near-term events arising from competition and tension between the global powers have raised larger and longer-term questions on the shape of the global order to come.

2. Encouraging “disciplinarities” in strategic risk management. At a workshop on risk organised by the CSF in September this year, one of the key points raised by participants was the need for broader and more diverse perspectives in risk management. This can be summed up in three disciplinarities — cross (viewing one discipline from the perspective of another), multi (different disciplines working together) and inter (integrating knowledge and methods from different disciplines).^[3] For example, a cross-disciplinary approach might entail evaluating the use of risk management tools and frameworks through the lens of strategic foresight, while a multidisciplinary approach may involve building up communities of practice drawing on a range of organisational contexts and expertise from disciplines that are not directly related. An interdisciplinary approach to risk management, on the other hand, is likelier to be a longer-term pursuit as practitioners need to establish a feedback loop from their experiments and interactions before a meaningful synthesis across disciplines can emerge.

3. Looking beyond existing definitions and criteria. When scanning the horizon to identify strategic risks, definitions and filtering criteria are crucial else the process becomes an attempt at boiling the ocean. However, these definitions and criteria can also pose an inadvertent risk to the effectiveness of the scanning process over time. While there are unfortunately no easy solutions, there are some helpful starting points. For example, the concept of a risk “clock speed” — the rate at which information necessary to understand and manage a risk becomes available — is helpful for strategic risks that are cutting across time horizons. Another lens for identifying strategic risks involves taking a resilience-driven approach, i.e. assess risks on the basis of whether existing systems and society can reasonably absorb or recover from the impact expected to be caused. This type of approach is particularly helpful for risks such as those related to cybersecurity, where a defensive/reactive approach is increasingly seen to be less effective than expected.

A common thread tying these three ideas together is the need for regular checkpoints to examine the output of a risk management process, whether to evaluate how identified risks are behaving across time horizons or to use a different discipline’s lens to open up discussion around novel facets of a risk. These checkpoints can in turn encourage a view of risk management processes as works-in-progress, and help develop organisational flexibility and agility amidst the certainty of change.

Endnotes 

[1] Curry and Hodgson, “Seeing in multiple horizons: Connecting futures to strategy,” Journal of Futures Studies 13, no. 1 (Aug 2008): pp. 1–20

[2] Ibid.

[3] Definitions from Jensenius, “Disciplinarities: intra, cross, multi, inter, trans,” Alexander Refsum Jensenius, 12 Mar 2012

Manoj Harjani was Lead Strategist at the Centre for Strategic Futures.

The views expressed in this blog are those of the authors and do not reflect the official position of Centre for Strategic Futures or any agency of the Government of Singapore.