Risk Intelligence : The people dimension

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Risk Intelligence The people dimension

• By A.V. Vedpuriswar
• Based on the book by David Apgar

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What is Risk intelligence ?

• Companies must proactively build their
  capabilities to deal with risk.
• Learning plays an important role here.
• Companies must assume those risks where they have
  a learning advantage.
• Learning effectiveness is enhanced if we leverage
  the strengths of people working in the
  organization.

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Risk intelligence score
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Impressionists, encyclopaedists, and amnesiacs

• The three patterns of risk assessment are
  impressionists, encyclopaedists and amnesiacs
• Impressionists anchor on highly memorable
  experiences that often lack relevance to their
  immediate problems
• Encyclopaedists accumulate a wealth of
  superficial knowledge that lacks surprise and
  tells little thats not already known
• Amnesiacs gather experience thats relevant and
  memorable.
• But they dont distinguish it from less important
  information and do not preserve it for ready use
  when needed.

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Impressionists (1/3)

• Impressionists anchor on strong experiences and
  then apply them broadly.
• The problem is that they apply them too broadly.
• The memorability of their experiences is much
  greater than the relevance of their experiences.
• The impressionists highly memorable experiences
  are misleading when they are not relevant to a
  particular problem or the risks underlying it.

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Impressionists (2/3)

• Its precisely because improbable experiences
  make such a strong impression on us that we try
  to apply them where they are irrelevant.
• Impressionists are average in the amount and
  diversity of experience they bring to bear on
  their projects risk problems
• But their experiences are typically strong in
  surprise while weak in relevance to most of the
  problems they face
• How can impressionists enhance the relevance of
  their experience without sacrificing its
  memorability?

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Impressionists (3/3)

• The three most important practical steps
  impressionists can take fall under three of the
  elements of the risk intelligence score
  relevance itself, diversity of experiences, and
  record keeping.
• Address the relevance gap through personal or
  organizational experience.
• In general, tackle a problem that seems to share
  root causes with the new risks you are evaluating
• Another way to fight a tendency toward
  impressionism is consulting the record.
• You may not recall or know of experience in your
  organization relevant to a new risk, but it may
  be there.
• Reach out to your colleagues and ask.

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Encyclopedists

• Encyclopedists have lots of experience that
  applies to the risks underlying new projects or
  risky decisions, but the experience teaches no
  strong lessons.
• The encyclopaedists experience suggests nothing
  about the risks that we would not have guessed.
• The key gap in the encyclopaedists experience is
  surprise or improbability.
• People changing occupations or entering the
  workforce can bring along their training and
  background.
• But that training cannot replace the memorability
  of a few shocking experiences that gives us our
  strongest sense of how the word is not
• This is the predicament of the encyclopaedist.

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Amnesiacs (1/2)

• The amnesiac has surprising, memorable
  experiences relevant to a broad variety of
  project choices, risky decisions, and problems
  challenging an organization.
• The problem for such people is not just
  forgetting what they learn.
• Its failing to record it in a format others can
  use.
• Amnesiacs have loads of raw experience but what
  they know cannot really accelerate the
  performance of a colleague unless it can reduce
  the colleagues personal dependence on them.

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Amnesiacs (2/2)

• Companies must systematically capture the
  amnesiacs rich experience in a way that others
  can use.
• It makes far more sense for companies to shift
  the burden in moving what amnesiacs know to
  software the rest of the firm can use
• Rather than assume amnesiacs zealously guard
  knowledge, organizations should ask other
  employees to debrief their amnesiacs through a
  formal interview process

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The three ages of risk intelligence

• The encyclopaedist, the impressionist, and the
  amnesiac represent three stages in a life cycle
  of risk assessment skills and the experience
  underlying them.
• Encyclopedists have lots of book knowledge, but
  lack memorable experiences that sharpen judgment.
• Impressionists have highly memorable knowledge
  but apply it indiscriminately in cases where it
  doesnt apply.
• Amnesiacs have rich stores of relevant, memorable
  experiences but do not reliably record it for
  others to use.
• Together, they represent the youth, adulthood,
  and old age orrisk intelligence.

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Creating complementarities in the team

• Grouping encyclopaedists, impressionists, and
  amnesiacs to complement one another makes sense.
• A task force with an encyclopaedist will have
  rich background knowledge.
• A task force with an impressionist will be
  decisive.
• A task force with an amnesiac will avoid errors.
• Together, the three can be formidable.