Rethinking Risk in Turbulent Times - Article by Dr Petrus de Kock, in PMR Africa Magazine
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Decision making in hyper-complex market, societal, and politico-economic operational environments, is a gargantuan task. What, with global supply chains buckling further under not only the after-shocks of economic lockdowns, but now, a major war in Europe, involving just about all major powers, either directly, or indirectly, via proxy in the Ukraine.
If risk identification is approached as a compliance-based tick-box exercise, to keep an audit committee ‘happy’, then that very behaviour is actually one of the biggest risks any business can face at this stage.
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The reason is because assumptions of systemic, societal, market, or political-economic stability are challenged by manifold unpredictable disruptive forces and occurrences. South Africa was rocked during July 2021, when insurrectionist forces (from inside the ruling party) launched well planned and disruptive asymmetric actions to destabilise the economy. With growing global conflict dynamics, inflation, and food insecurity looming, it is necessary to fundamentally re-think how a business, or organisation engages with its operational environments and markets.
This means, assuming that there is a ‘more or less firm foundation’ (meaning, systemic status quo) from which to project, and extrapolate probable and improbable risks the system, or a business, might encounter on a given future trajectory, may just be a More or Less unstable foundation.
This means that risk-opportunity analysis intended to inform strategy development, has to accept that economic ecosystems, and nations are stretched. In some instances the latter are stressed, increasingly brittle, or prone to outbreaks of civil unrest, feeding broader socio-systemic disequilibrium.
RiskRecon understands that if there is to be a scale on which change can be weighed, the following two poles can be applied, being: Marginal versus Non-Marginal Change. Change with ‘Marginal’ impact on the equilibrium of the system, will occupy one end, while the other will weigh in as change, or events that have a ‘Non-marginal’ impact.
In the case of the non-marginal, it means change that disturbs the systemic balance, and nudges it towards change that threatens and upsets systemic status quo/equilibrium. RiskRecon enables thinking that help to identify the sources of risk, or, non-marginal change, that may upset market conditions in unpredictable ways.
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RiskRecon recently released a report entitled: The South African case – local government failure as first stage of state collapse. It explores critical questions regarding the risk and stability outlook for South Africa in the light of extreme governance and social instability at local government level, as well as the consequences and stability implications events of July 2021 holds for the nation’s outlook.
RiskRecon proposes that it is necessary to peel away a few layers of the risk onion to enable decision makers, organisations, and businesses not to be outmanoeuvred by dynamic real-time unpredictable market realities.
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This article is adapted from the RiskRecon blog series entitled: Asymmetric challenges and survival tactics in the turbulent twenties.