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Improving ERM Practices in the Age of Pandemics and Cyber Crime:  Part XIV - We Can Make Things Better!

9/9/2021

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​We live at a time when humanity is steadily moving away from riskier forms of self-sufficiency to safer and more productive forms of mutual interdependence. This happens only through the evolution of existing systems and models for managing uncertainty. The COVID-19 pandemic can be a turning point that leads to a step-change in the effectiveness of ERM.  

Organizations “don’t necessarily do good risk assessment. They can give the impression of it but, in fact, deliver something that’s completely dysfunctional. And I think the best illustration of this is COVID. Because on paper—and this is the shocking thing—the United States was the best-prepared country in the world for a pandemic. Number two [was] the United Kingdom. And I delved into these findings, and sure enough, on paper, there were elaborate pandemic preparedness plans. It’s just that none of them worked. We have the illusion of preparedness for disasters that we have good reason to anticipate, though we don’t know their exact timing. We have all this paperwork that says we’re ready. But when it actually happens, it turns out that much of this was just ass-covering, rather than real preparation.“
- Disaster is Political, Podcast Interview of Niall Ferguson by Yasha Mounk (July 10, 2021). James Fallows, The Three Weeks That Changed Everything, The Atlantic (June 29, 2020).


One of the most interesting lessons of the COVID-19 pandemic is that on paper, the United States was ranked first in the world for pandemic preparedness. Ranked second was the United Kingdom. These rankings were part of a comprehensive assessment and benchmarking of health security and related capabilities across 195 countries all of whom are parties to the World Health Organization’s 2005 International Health Regulations. This first of a kind indexing of each member’s country to prevent and mitigate epidemics and pandemics was performed by an international advisory panel of 21 experts from 13 countries as a means of improving international capability for responding to public health emergencies. Further, this tool for building collective action and accountability was published in 2019, shortly before start of the COVID-19 pandemic (See Global Health Security Index - 2019).

What is shocking is the degree of failure in the United States. As of this writing (July 2021), the U.S. still leads the world in total infections and death. Further, despite widespread vaccine availability, the U.S is experiencing the largest increase of confirmed cases since April 2020 when the pandemic was just beginning (See Dashboard by the Center for Systems Science and Engineering at John Hopkins University). Students of risk management, however, are probably not surprised. Since 2009, the ERM Initiative at North Carolina State University’s Poole College of Management has been reporting similar finding about the impact of ERM and risk management in general. In sum, these annual surveys confirm that regardless of company size, current risk management practices, as robust as they are, are not seen as adding value to an organization’s success (See The State of Risk Oversight:  An Overview of Enterprise Risk Management Practices - 12 Edition).

Why this duality both in society generally and within the field of risk management? Why does the current state of affairs feel like the opening line of Charles Dickens’ A Tale of Two Cities - it is the best of times; it is the worst of times. The answer lies in appreciating where the field of risk management and similar disciplines are in their current state of development.

History teaches us that progress is a never a result of knowledge and scientific discovery alone. It requires the forces of social technologies. Think of it this way, until the last 200 to 300 years, knowledge and the ability to engage in scientific discovery were in the hands of a few people, typically the elite that led the institutions of the day (e.g., church, state etc.). Consequently, if the king reasoned that the letter A leads to the color purple and that purple leads to banana and, therefore, we should all eat bananas to avoid smallpox, there was little that people could do to change that reality. People were stuck because they didn’t have the means to form new systems and structures for making and disbursing knowledge.

What eventually made eradication of smallpox possible is that we got better at designing the way communities organize and operate in three ways:
  • describing and assessing current conditions and trends;
  • determining what improvements can be made in an evidence-based way; and
  • providing a way to make the needed improvements.

We call this process social technologies. Social technologies take various forms, including science, law, journalism, government and yes, even risk management. Credit for the term social technology belongs in part to Albion Woodbury Small who founded the first college-level department of sociology at the University of Chicago in 1892 and was influential in the establishment of sociology as a valid field of academic study. Put simply, social technologies help us improve how we organize and coordinate with each other to live better than those who came before us.

The next series of articles will explore risk management as a tool of social technology in detail. The goal will be to help stimulate a dialogue about how the field of risk management should evolve in a manner consistent with human progress. Ultimately, all social technologies, including risk management are, in essence, methods to process ideas, facts, and opinions in structured and systematic ways that, when done well, lead to material improvements in the quality of life.    

Hence, it is time for us to assess the various ways that risk management can evolve as a discipline and function to help propel forward the organizations and communities we serve. Let’s start this exploration with excitement and confidence. After all, it is the rise of social technology that has led to doubling the average human life span in the last 100 years. In effect, social technology has given humanity an extra life because people, especially young people, stopped dying before the age 35-40. If we can double the life expectancy of mankind, surely we can improve the field of risk management. Onward!

1 Comment
liana link
11/22/2022 10:56:22 pm

thanks for info

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    Authors

    Lori Siwik and Mark Siwik are the founders of SandRun Risk.  They apply the principles of vertical leadership and lean six sigma to the discipline of risk management.  From time to time they share their blog with guest authors who write about important risk management principles.

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