This article follows up my earlier post, Risk Maps should not be used for decisions of any consequence, to provide an alternative interconnected perspective on the ECB Supervisory Board risk drivers.
Risk connectivity is the opportunity to identify and explore a holistic view of risk that promotes a broader and deeper understanding.
Examples of how integrated our systems have become regularly make the headlines; the shutdown of fertiliser plants for routine maintenance this summer led to a shortage of CO2 gas which in turn lead to shortages of fresh vegetables on market shelves and the rationing of beer to pubs just as the World Cup was getting started.
In order to understand our how connected our society, businesses, information, government and economies really are – and to avoid running out of beer – we need to have a holistic view. What is a holistic view? I’ll let Dirk Gently of the Holistic Detective Agency explain:
I’m very glad you asked me that, Mrs Rawlinson. The term `holistic’ refers to my conviction that what we are concerned with here is the fundamental interconnectedness of all things.
I do not concern myself with such petty things as fingerprint powder, telltale pieces of pocket fluff and inane footprints. I see the solution to each problem as being detectable in the pattern and web of the whole. The connections between causes and effects are often much more subtle and complex than we with our rough and ready understanding of the physical world might naturally suppose, Mrs Rawlinson.
Let me give you an example. If you go to an acupuncturist with toothache he sticks a needle instead into your thigh. Do you know why he does that, Mrs Rawlinson?
No, neither do I, Mrs Rawlinson, but we intend to find out. A pleasure talking to you, Mrs Rawlinson. Goodbye.
That’s cleared that up; any questions?
In the picture below I have connected the 14 ECB risks based on my limited knowledge of economics and the nature of European Banking risk.
While there is undoubted value in identifying patterns in the output such as key risks that link many others, or act as a bridge between clusters, or appear to be unconnected to other risks, the true value of Risk Connectivity Mapping is derived from determining where connections exist and the nature of this connection. In time I expect understanding the connections between risks to be at least as important as understanding the risks themselves.
Further I propose that how effectively we respond to and mitigate the transmission of risk will be proportional to our understanding of connections strength and directionality, that is, recognising risk as either the source or target of influence.
Risk Insights Explorer is a unique tool that identifies risk relationships and the key drivers of risks. In doing so it encourages communication and engagement and enables leaders to understand the ripple effects of decisions thus avoiding unintended or unanticipated consequences.
This month we will be hosting bi-weekly webinars, starting with An introduction to Risk Insights Explorer. These will be free 60 minute sessions hosted online and available to everyone. Please visit here to register for details.
If you can not make these sessions due to time differences or work commitments, I would be very happy to arrange a demonstration at a time of your convenience.