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The Dimensions of Risk Management - June 2000 : A Trip Overseas to Examine Risk

By Michael Vincent

26 December, 2006

I recently returned from a trip to the UK and Asia to examine the progress of the concept of risk management in an educational and business sense.  It was a learning trip to see how we compare in our thinking of risk against others.  As a country we are in our infancy in our understanding of the concept of holistic risk and how it binds the company and industry together.   However by a broad comparison we are well prepared to face the risks that will emerge in the future, if we continue down the path we have set ourselves.  Too often because of the distance between us and other developed countries we tend to think we are always behind, this is not necessarily the case here.

 For the next couple of issues various facets of the trip will be discussed.  We can be justly proud that the conceptualisation of risk as a philosophy and the production of the Australian Risk Standard AS/NZS 4060:1999 that gives us a framework to move forward at a pace at least as good as the rest of the world and better than many.

This month though I would like to comment on a book that has just been released and lists what the author describes as the ten recurring patterns of an archetypal system.  The book is "World of Risk" by Mark Haynes Daniell.  A book worthy of reading and contemplation, it represents an interpretation of risk and how it can be applied to the future and the era of uncertainty we are entering.

Ten Recurring Patterns

The first five:

The factors to consider here are the sources of risk and opportunity, (nobody would today in business say "I love you") voice and data messages, IT, products, capital, people, ideas, images and hazardous waste are just a few of the consideration here along with the more traditional view of globalisation.

2.         Complexity

Business is becoming increasingly complex, companies strive to become multinational and evolve into transnational and supranational entities where possible.  Many wither on the way.  This aspect represents a physical representation of the traditional risk and return scenario, the more complex the greater the risk but potentially the greater return.  Until complexity kills.

3.         Turbulence

This creates greater than average dislocation in a given system.  Dramatic change within an environment creates critical variables to create uncertainty and forces functional variance as the norm.

4.         Dynamism

Dynamic systems, by definition do not stand still.  The current paradigm is always under stress to change and mutate to fit the emerging conditions.

5.         Acceleration

The pace of change is accelerating in virtually every dynamic global system.  Complexity, globalisation, the intersection of systems and the unprecedented pace of technological change and its spreading influence exponentially forces acceleration.

The above represents a very small part of the book but in my view represents the strategic challenge of the future for survival.

Next month - the remaining five recurring patterns.

About the Authors

Australasian Risk Management Unit

Faculty of Business and Economics