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Uncertainty Advantage, a book about leveraging risk for competitive advantage, climbs to #4! Thank you!!

A very big THANK YOU for supporting my multi-year project!!  “Uncertainty Advantage:  Leadership Lessons for Turning Risk Outside-In” has been steadily climbing up the charts!  Please help me out by providing an Amazon review!!! #risk #riskmanagement #uncertainty #management #supplychain #resilience #RIMS #ISM #insurance #leadership #strategy

 

UA 3D 1 on 1 to Left 2

 

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What should we worry about in 2018? The results are in and it’s everything but nothing!!

It’s that time of year again and the predictions are in for what’s ahead in 2018 – see below for the links.   Personally, I enjoy reading the various reports but making them relevant to a specific organization, product, process, function, person, etc. is quite a challenge.  Where’s the case for action?  On the surface, the half dozen or so risk reports reflect the reality of an organization’s challenges.   However, for most organizations, it’s difficult to determine the relevance of the event/threat/risk, the magnitude of the potential disruption and the circumstances that need to be in place for the risk to become fully realized.  It’s not that they are unable to make the connection.  It’s about competing priorities and the investment needed in time, management attention, resources, and capital or budget needed to understand uncertainty.  The list of questions is a long one; how do these risks influence or accelerate change in the industry’s value chain (and your product/service value proposition)?  How does the event or change impact profitability?

You might ask, isn’t the organization and it’s leaders already “all-in” on this topic?   Haven’t they made massive investment in people, process and technology to support massive ERM programs (enterprise risk management), risk registers, audits and third-party assessments, compliance reviews, and dozens of [fill in the blank] risk program (e.g. quality, business continuity, security, cybersecurity, environmental, health, safety, corporate responsibility, sustainability, insurance, records management, supply chain, and now…strategy risk).

Hold on for a minute!  Maybe the way risk is being viewed and managed and the methods for allocating resources is the greater exposure?  In today’s dynamic, information-rich and technology-driven world why can’t we immediately link a change, threat or event to the profitability, performance, and value of a particular product, product family or revenue stream?  Why does it take so long for the organization to understand (and respond) to potential economic, social, and jurisdictional consequences and opportunities?  We are a society that has commercialized complex technologies such as autonomous vehicles, robotics, and 3D printing so what’s the big deal?   Hmmm, maybe the lack of the business case for understanding uncertainty, risk and opportunity or exposure is the issue.  For many of us who have been dabbling in this topic for awhile, we acknowledge that there’s plenty of room to improve the mindset/behaviors and attitudes towards risk as well a need to greatly enhance competencies and capabilities in the context of business and social goals.

The good news, change is coming and it’s coming fast.  Stay tuned as we explore many of these changes through a practical and actionable lens.  I’d love to get your thoughts, come join the journey!  In the meantime, enjoy the read and of course, consider who’s presenting results!!  If you’ve seen one risk report, you’ve seen one risk report – it’s about who’s point of view.

“World Economic Forum Global Risks 2018”,  WEF Global Risk Network

“Top Risks 2018”, Eurasia Group

“The Top Global Risks for 2018”, Protiviti

“Allianz Risk Barometer 2018”, Allianz

“Top Risks 2018”, Atlantic Council

“Three Emerging Market Risks Companies Should Watch Out for in 2018”, HBRHarvard Business Review

“2018’s Most Dangerous Risks for Insurers”,  Willis Towers Watson

“These are the Top Ten Risks in 2018”, Time

Be careful

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“Where in the World” will manufacturing move to in the coming decade (and what uncertainty does this bring)?

Excellent video from HBR on the next major shift to manufacturing.

Compelling arugement for yet another shift in “where in the world” manufacturing will dominate.  Chinese enterpreneurs seeking return, rising landed costs, other factors driving the next wave of change.   Africa?   How quickly can infrastructure be built?  Can political and social conflict be covercome to exploit this opportunity?How would this shift impact your supply chains? What part of your supply chain is most likely going to experience the change? What industries will be impacted first? What new uncertainty is ahead? Are these questions being raised now as part of your leadership discussions on competitive strategy?

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NDBI: the missing piece of your business interruption insurance?

An excellent article that explains the “scale and scope” related-shortcomings of the frameworks and methods used to manage risk in an organization’s supply chains.

Here are a few additional thoughts:
Two points.  The lack of “complete” coverage (beyond the scope of physical triggers and assets) reflects the bigger issue of how many organizations neglect to address risk in their supply chains. One of the reasons for this gap is due to the functional nature of organizations and the lack of ownership of these issues across entire supply chains. Today, the scope of most supply chain risk work is limited to sourcing and procurement. The second challenge is what I refer to as the complex sale. When we (while I was at Marsh) developed this type of coverage back in 2008 we found that few organizations were willing to do the upfront “insurance” assessments across multiple functions (again, partly because of the previously stated reasons. However, organizations that were willing to step up to the broader challenge preferred a much more detailed analysis, driven by value (products that drove profitability). Ultimately, we’d get back to “now what”, i.e. what to do to mitigate the risks, and the value of having the scope of NDBI coverage was welcomed.

 

 

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The Five Steps of Risk-Based Decision Making

Excellent summary of the process!

“The Five Steps of Risk-Based Decision Making”, From the American Society of Safety Engineers

Might also consider:

– Defining expected business outcomes (in Step 1)

– Quickly identifying what’s truly unknown (uncertainty) and what’s somewhat known (what can be measured, assigning probabilities to possibilities). I’ve found two streams helps keep moving the decision along (step 2)

– Identifying what others are doing and determining if your “risk-based” process can be used for competitive advantage (i.e. improving profitability, either by adding market value or managing cost).

Don’t forget to take the time to understand others perspectives (and understanding of how they make money) – customers, suppliers, producers, competitors, potential new players.   UNCERTAINTY = OPPORTUNITY

– Dialogue, dialogue, dialogue. No longer is just about the rules and compliance. Navigate, then manage. It’s a negotiation and there is no better time for risk professionals to be part of it. Markets move fast, organizations do not!