Man-made risks — such as cyber-attacks, climate change and terrorism — have become so prevalent and severe that they now impact most everyone, as well as the ability of organizations and governments to operate with resilience and certainty. Such risks may no longer be referred to as anomalies with limited consequences, but are, rather, indicative of the costs associated with living in the Anthropocene Era, where the actions of human kind negatively impact the environment, and collide with natural risks. In this Era, where uncertainty and unpredictability are the norm, and organizations of all kinds are being challenged like never before, the need to make great decisions has come to transcend the profit motive, for firm survival is at stake.
Traditional organizational decision-making processes – which tend to entail linear, empirical, one-dimensional thinking — have of course been widely used for decades, but have never before been put to the test with such transcendent and centrifugal forces tugging at its core. We have entered an era in which information boundaries have been erased, communication and money flows are instantaneous, and our infrastructure, cities, and even some countries face grave threats to their existence because of the pervasive threats of climate change, cyber risk, and terrorism. In such a condition, it should be clear to risk managers and leaders alike that conventional decision making may be insufficient in managing and staying ahead of such risks.
In addition to having to contend with man-made risks, the ‘forced’ regulatory transparency that has been routinely imposed on publicly-held organizations – particularly since the Great Recession – has had an adverse effect on decision making processes in large and complex entities. Enhanced compliance and governance guidelines have only added to the legions of employees devoted to compulsory forms of risk management, which have diluted the inclination of leaders to rely on their intuition. The resulting orientation toward risk-aversion, and the accompanying indecisiveness in determining the nature of unprecedented threats, can result in outcomes every bit as dangerous as many of the threats organizations are trying to understand and manage.