PARMA2016 – the future of risk isn’t what you think

PARMA 2016 just came to a close and what a great show it was. The main theme of this year’s most prestigious risk management conference was “the future of risk.” We heard all about drones, self-driving vehicles, communication and even staying focused on your goals. Sure all of the things are risks we will face now and in the future, but those are just modes or different methods of the same risk. Drones and the cameras they house are just advances on the same technology – the underlying risk is privacy. Cars have been around for a long time all we are doing is adding a layer with the self driving aspect of autonomous vehicles. In reality, we don’t know what new risks we will face – only time will tell. But what we do know is that the real future of risk lay hidden below the surface.

The real future of risk is complexity

Complexity. Yes, complexity. The world is a complex place. It always has been. We just didn’t have the tools, skills or abilities to see or even explain those complexities. As our knowledge and our technology develops, we add layer after layer of complexity.

Some of that complexity leads to enhancing our world and sadly some of that same complexity drives us to chaos. Now, more than ever, our human thirst for knowledge and quest to capture every detail about every thing is creating overwhelming complexity. And that complexity is getting in the way of progress, safety, risk and well life. It stumps us, creates analysis paralysis and generally removes us from the present moment.

Just look around

We will get back to the issue of risk in a minute, but first take a look around you the next time you are out on the town. Can you purchase a cup of coffee quickly or are you waiting for the person in front of you to open their phone’s Starbucks app and to scan their payment only to find that the iPhone screen protector doesn’t work with the barcode reader? Are you able to purchase something from the grocery store or pharmacy quickly or do you have to answer three or four questions before making a payment so Walgreens can better understand your buying habits?

The vast majority of us can’t change the oil in our own vehicles these days (not that we want to, but it is a good lesson for the youth) let alone diagnois some minor computer issue that stops the vehicle cold.

Punch the gas to avoid an accident and you will be explaining to your insurance company why you made that choice or your premium will rise. Accidently take your chip-enabled key into the pool or surf and you can forget about even starting your car. Chip-enabled keys are great to deter theives from swiping my new car, but damn it, it doesn’t make one bit of difference if I have to leave it on the front tire to go surfing.

Sure most of this technology helps keep us safe, prevents theft and even makes life easier on the surface. But that’s the surface. I have more than 270 passwords to track for varying accounts and apps that I use to run my business and personal life. Keeping track of those is a nightmare.

So how does all this complexity relate to risk, let’s take a look.

Complexity and risk

There’s more data. There’s more equipment. There’s more software. Simply put there is more everything. And that knowledge is making people smarter. Unfrotunately, you the lone wolf of risk management can’t process or manage all that data, software, equipment or information and you certainly can’t maintain all the knowledge that the general public is coming at you with.

State Fire Marshall, Building Codes and even OSHA regulations are so detailed and complex that trying to digest them would take years. And we haven’t even started to look at Education Code or insurance regulations. For example understanding the various language found on a certificate of insurance can overwhelm the experienced risk manager and certainly the new risk manager. A single risk manager or even three can’t keep up. And that is the risk of complexity.

The public knows more than you

So we can’t know it all, but the public can. Each member of the public has a pet project or special interest. That member of the public latches onto a single topic and they spend hours upon hours researching their issue. They become an expert (or may already be) in the area of concern while you are trying to manage hundreds of moving pieces. While you maintain a surface knowledge of the issue, the general public will run circles around you. Try to pretend your way thru the issue and they will call your bluff.

Time and time again, we see risk managers, lawyers, and the public caught in some technicality which results in a lost case and injury or some other type of loss. Just consider the differences in processing a sexual harassment complaint vs. an IEP vs. a workers’ compensation claim.

So, how does a single risk manager in charge of a school district or city manage this complexity and stay fresh? Short, sweet and simple – THEY DON’T. But more on that it a minute.

It’s moving too fast

When I was in 8th grade (you can try to guess the year), one very smart teacher said “in the future technology will move so fast that things will become obsolete in 6 weeks.” He was wrong, it is obsolete before you even buy it.

The risk of complexity leaves us in the dust. Things move so fast and they change so rapidly that we are always behind the eight ball. Uber, nano-tech, self-driving cars, drones and the like all present risk and they will continue to. And you can’t keep up alone.

Dealing with Complexity

So how do we manage it? Not alone. We can’t manage all the complexity alone. We need to build robust teams of experts. We need to stop focusing on mega profits and hire enough people to be responsible for the complexities and then we have to know that it is okay to specialize in one area. We have to work together to solve issues, communicate the varying complexities and integrate those complexities. We also have to work to make things more simplistic.

More people to manage risk is the answer.

One final thought on simplicity – options are great, but all the research shows that when we have too many options we can’t make decisions. We are paralyzed by the choices. We haven’t developed the decision making skills necessary to operate in this world of complexity. If you really want to manage the future of risk, hire more people, make things more simple and communicate it to the world.

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