Things are always going wrong. No matter how hard we try to keep everything under control, something will always happen to mess up our hard work. Now I’ve read David Hancock’s book, Tame, Messy and Wicked Risk Leadership, I wonder if I shouldn’t be blaming everyone else for messing up, but myself.
Hancock presents the view that actually the world is a lot more complicated than our traditional risk management models can cope with. He argues that we should be looking to the worlds of sociology, philosophy and politics to establish new ways of interacting with risk.
We need to do this because the equation risk = likelihood x consequence only works when the risk is as a result of a knowledge gap. Get more information, analyse it, and you can reduce the risk.
Sometimes all the knowledge in the world won’t help you reduce the risk. He says:
Yesterday’s response to a given set of circumstances is only a hint of what tomorrow’s response to that set of circumstances will be and, in any case, today’s circumstances will never reappear tomorrow precisely as they were today. So we really do not know what the future holds. Risk in our world is nothing more than uncertainty about the decisions that other human beings are going to make and how we can best respond to those decisions.
Much of what Hancock describes is most applicable to large, complex projects with multiple stakeholder groups, like public sector initiatives. He uses examples from transport (he was responsible for the risk management system for the Heathrow Terminal 5 Project) and space exploration to give you an idea of the scale. When you are dealing with projects this big, he says it no longer makes sense to split risk management across different functions or initiatives.
We need to address the total uncertainty facing an organisation, in any instant, and how risks correlate, before we can take responsible action.
He goes on to explain this in action by giving an explanation of the recent financial collapse – with clarity that rivals Robert Peston’s headline-grabbing approach.
Most of the book is taken up with explaining what tame, messy and wicked problems are all about. Here’s a summary:
Tame problems: these have “simple, linear causal relationships that have clear beginning and end points.” The traditional approach to risk management works for these. You gather data, analyse the situation, formulate a mitigation plan and then implement your plan.
Messy problems: these are “problems of organised complexity, clusters or interrelated or interdependent problems, or systems of problems.” You can’t solve them in isolation. Systems thinking helps unpack these problems. One example he gives is alleviating traffic congestion. You can’t solve it by widening the motorways or increasing road tax. There are lots of issues at stake, even if we all agree that sitting in traffic jams is bad.
Wicked problems: these are more complicated than messy problems. We can unravel messy problems eventually “as long as most of us share an overriding social theory or overriding social ethic.” If we don’t, we end up with wicked problems. These are where the solution proposed will likely depend less on a probability model and more on your view of the world. Consequently, there is no right answer and five stakeholders will have five different approaches to managing the risk.
For a book with ‘risk leadership’ in the title, the discussion about this doesn’t start until the book’s conclusion. In fact, there are only about two pages worth of explanation about risk leadership, and I felt short-changed.
Risk leadership is about putting aside traditional linear risk processes and developing relationships with stakeholders, scenario planning, helping others live with uncertainty and facilitating mitigation plans to achieve the best possible compromise, understanding that there is no right answer.
This sounds fascinating, and I wanted to read more about it. Maybe Hancock will write another volume exploring the concept of risk leadership in more depth?
This review first appeared on The Money Files at Gantthead, in May 2011.