Strategic Risk Management: the fox and the hedgehog.

Author: Manu Steens

In this article I write my own opinion, not that of any organization.

Last week, during my vacation, I read a kind of history book. The title is ‘On Grand Strategy’ by John Lewis Gaddis.  It is about figures such as Xerxes, Napoleon, Machiavelli, Lincoln, Adams, Washington, Elisabeth, Philip II, Franklin D. Roosevelt, Von Clausewitz, … .  The great key figure, however, was a relatively unknown person, Isaiah Berlin. He was lucky enough to read ancient texts and to come up with the idea of the duality of the fox and the hedgehog in strategic thinking and acting.  In strategic leadership.

What is this two-unit, and is it always there?

The pure hedgehog is the leader who sets the goals. ‘There we go’. But he doesn’t see the obstacles.  Sometimes he is the ‘man who is always right’.  The pure fox is the man who sees the obstacles everywhere on the track, but does not naturally set goals. He does set achievable milestones however.

Often, leaders think they need to be concerned with goals, and then leave the road to them to the organization’s employees. A typical example of this was Xerxes who crossed the hellespont with a large army, while his advisor left him because he realized that the army was going to get into logistical trouble because of his gigantic magnitude.  Xerxes’ troops were eventually stopped by the Greeks.

An example of someone who did achieve his goal was Lincoln. He was a strategist at heart, in the sense that he set his goal like a hedgehog, which was to abolish slavery. He achieved that goal through devious detours, including bribery, like a fox. The following words are attributed to him:

“A compass […] will show you the geographical north from where you are, but no advice about swamps and deserts and abysses that you encounter along the way. If you run headlong forward on the way to your destination without paying attention to the obstacles and eventually sink into a swamp […] what good is it then to know where the geographic north is?”

So he knew when to consult the compass like the hedgehog, and to bypass the swamp like a fox.

This comes with an important consequence: one has to adapt the goals to the means at one’s disposal.  Because in times of scarcity, the lack of (people and) resources is one of the biggest swamps in which a hedgehog can sink.

After all, this means for risk management that this has an important place in top management.  No good hedgehog survives without a good fox by its side.  Since these two characteristics belong to a single function of strategic leadership, it can be said that there is no well-functioning organization without sound risk management.

The fox, however, is what I call strategic risk management. He will naturally maintain intense contact with the relevant operational risk management, which in itself is in direct contact with (a part of) the environment.  The fox in the strategic leader must therefore be aware of what is going on in operational risk management.

It is for this reason that we can say that an organization in which top management is involved in the risk analysis, makes an important leap in terms of risk maturity at the moment that it actively engages in it.

The climate problem is a continuity problem. How do you go about that?

Author: Manu Steens

In this article I write my own opinion, not that of any organization.

In the month of July I mainly read in the book “Drawdown – The Most Comprehensive Plan Ever Proposed to Reverse Global Warming – edited by Paul Hawken”.

This book contains 100 interesting reports of climate-saving measures. In addition, there are innovative ideas in it. One of them caught my attention more than the other, because it seemed so miraculous to me: ‘artificial leaves’. It says that on June 3, 2016, Nocera and Pamela Silver announced that they had succeeded in making high-energy fuel by combining solar energy, water and CO2. By using two catalysts, they have obtained free hydrogen gas from water. By feeding this to the bacterium Ralstonia Eutropha, it turned it into liquid fuel. If the bacteria were fed pure CO2, the process is at times as efficient as photosynthesis. If they extract the CO2 directly from the air, it is three to four times more efficient as photosynthesis.

A few pages later it was about the technical capture of CO2 from the air. (This is called DAC or direct air capture.)

You can already see my idea, the idea of DAC that Bill Gates also proclaimed in his book is useful to feed this ‘trapped’ CO2 in a higher concentration than in the air to this bacterium. If you realize that on a large scale, you organize a potentially closed cycle for the creation of pure air on the one hand and fuels on the other. For the time being, there are economic obstacles. These may be surmountable in the long term. Time that we may not have, so it will be useful should governments intervene.

However, that is not the only issue I would like to refer to. We are already in the process of further heating an overheated planet. It will prove to be an insufficient effort if we try to save the planet by only creating a sustainable cycle in fuel consumption. After all, we are in the midst of the transitional phenomena of rising greenhouse gases. Halting the increase in CO2 does not guarantee a stop to the evolution of the climate. At most, it will slightly adjust the evolution. A CO2 reduction in the atmosphere must be done – quickly.

Fortunately, there are plenty of possibilities described in the book. That’s a plus. However, to call this book a ‘plan’ as the title does is an exaggeration.

We have a number of things: for each solution (except for the innovations that can still be proven and developed), we already have at a deadline of 2020-2050:

  • The potential number of Gigatons of CO2 reduction
  • The net costs (financial investments to be made)
  • The net savings

For a plan we need some extra things. We have some additional questions:

  • Where on earth is each of the proposed solutions most efficient and where is it most effective?  With what deadlines for which carbon storage method?
  • How do we convince local politicians to make the budgets sufficiently free?
  • How and where can some solutions be combined?
  • How do we shape humanity’s behavior into the right behavior in their own environment?
  • How do we convince local politicians to make measures enforceable?
  • How do we convince local governments and the private sectors that there is a lot more money to be made from creating a livable planet than from continuing to parasitize on it? ‘Drawdown’ already gives a start with numbers.

Conclusion:

So the issue I have is that governments  have to work together at an international level. That they write studies to create a globally supported plan and then implement the same plan worldwide. CO2 neutrality is not sufficient. CO2 reduction is needed. If there is no plan with deadlines and control over their implementation, the book ‘Drawdown’ will remain what it is today: a result of a well-thought-out research on a number of small and large noble initiatives that are being disseminated and have potential. It would certainly be a pity if the opportunities to secure the continuity of the planet and earn serious money from it are not taken. That will require sacrifices. Especially from people with a large CO2 footprint. There is a danger that individualism will prove to be the biggest obstacle. Individuals are not going to solve the problem. However, it is the first priority.  Pressure from below will be needed.

Why can camaraderie be a pitfall in crisis management? Is collegiality an answer?

Author: Manu Steens

In this article I give my personal opinion, not that of any organization.

This article is inspired by “Chapter 10 – Fairness, Diversity, Groupthink and Peer Effects: Why Other People Are Important to Our Risky Decisions” from the book ‘The Ten Commandments of Risk Leadership – A Behavioral Guide on Strategic Risk Management’ by Annette Hofmann.  She gives the following law of risk leadership:

“Teams with great diversity with defined rules for communication and collaboration make better decisions.”

Research shows that teams need collaborative assignments/tasks, known rewards, and defined objectives to have a psychological sense of security and to promote productivity. Conflict can be good. If we aim for a good decision-making process, a diverse team with specific communication and cooperation rules is needed.

How does this relate to pure camaraderie? The first question is: what do we understand by camaraderie?

At https://www.vertalen.nu/betekenis/en/camaraderie , the term is defined as:

  • camaraderie among colleagues
  • “the quality of affording easy familiarity and sociability”

In my ideal image of a group of comrades, everyone is equal.  It is seen that when they  want to organize something among comrades, they looks at the natural leader.  And therein lies a hidden dangerous factor in the behavior, namely groupthink.

The original description of groupthink is by Janis (1991):

‘A mode of thinking that people engage in when they are deeply involved in a cohesive in-group, when members’ strivings for unanimity override their motivation to realistically appraise alternative courses of action.’

 It occurs when certain antecedent conditions (symptoms of groupthink) and a defective decision-making process are present.

The most important antecedent condition is a ‘cohesive group’. A similar other is isolation of the group. In both cases additional opinions and advice from third parties cannot end up in the group where they need to be. And are therefore not considered.

In addition, the attitude of the group leader is important. Especially when he selectively favors people in their opinion (often his own). Or when the group is homogeneously composed of like-minded people.

A third antecedent condition refers to provocative situational contexts. For example, in case of extreme time pressure, one chooses the leader’s solution, because one sees no other way out or considers nothing else as realistically feasible.

In addition, members with low self-esteem like to seek confirmation within a group and are averse to contradicting others (with group consensus).

Complex and moral conflicts can also affect an individual.

Symptoms of striving for unanimity are:

  • Illusion of being invulnerable.
  • An inflated level of optimism.
  • Increased willingness to take risks.
  • Blindness to warning signs and impending failure.
  • The belief that you are unstoppable.
  • The conviction of moral superiority.
  • Stereotyping of other groups.
  • The conviction of superior intelligence.
  • Considering negotiation with other groups futile because the other group is seen as incompetent and weak.
  • Underestimating the opponents.
  • Collective rationalization of one’s own great right.
  • Direct pressure on dissenters in the group.
  • The oppressive person presents himself as a sentiment guard.

Lesson learned from this could be that a strong cohesion of the group is one of the most important contributions to groupthink.

Groupthink needs strong feelings of solidarity and the individual desire of the group members to have good relationships with each other. This is often seen in comrades in a cohesive group.

The correlation between groupcohesion and groupthink is rather weak. But there is one. ‘Debiasing’ strategies are therefore needed.

A group with a strong leader is vulnerable to groupthink. Or if one is unsure of having a dissenting opinion.

  • Self-leadership is important for risk leadership to build self-confidence. For this, the interpersonal sense of safety is important.
  • Against homogeneity of the group and groupthink, third parties can be involved in the story. Often these are consultants.
  • Letting the group leader express his opinion last is useful to let others express their opinion for themselves. This is important for the impartiality of the leader. Otherwise, there is a danger that in the group
    • less information is used;
    • the leader exerts too much influence;
    • fewer proposals for solutions come on the table
  • In addition to personal safety, constructive conflict is beneficial. This is because differences in team members’ opinions, ideas, values, and ways of thinking are important to learn to work together optimally. This is best done with a high degree of interpersonal safety.

Conclusions:

Leadership is a double-edged sword because:

  • leadership can prevent groupthink by being aware of the antecedent conditions, the symptoms of groupthink, and symptoms of defective decision-making processes;
  • strong leadership can kick-start groupthink.

The camaraderie should not be ‘fictitious’: one must continue to dare to challenge the other. Otherwise, one is too easily impressed by the opinion of ‘peers’. After all, higher  social interaction also  increases this effect.

The culture in the crisis team is important. If in an organization one does not have the habit of expressing one’s own opinion in a crisismeeting, then this groupthink provokes a lower qualitative decision-making process, with higher chance of mistakes.  It can go so far that people expect you to keep your idea to yourself. With all the consequences for the quality of the decisions.

A well-known example of such groupthink was the disaster with the Challenger on January 28, 1986.

Another well-known example is the Chernobyl disaster on Saturday, April 26, 1986.

Consequently, it is best to work from a collegiality based on free expression. This may involve aspects of camaraderie, as a catalyst. Not as the main characteristic of mutual behavior.

What's in store for us?

Author: Manu Steens

In this article I am writing my own opinion, not that of any organization.

Recently there was a team building event for the organization I work for. On leaving the reception, a colleague asked if I knew about future crises that await us. Actually, the answer to that is: no. I don’t know that. Knowing about the future is pointless. After all, an Arabic proverb rightly says: “He who foretells the future is a liar. Even if he is right.” Doubting about a number of things, however, is another matter. And doubts can be well-founded. And it moves us forward to do this in a reasoned way.

So at that moment I spoke about what was on my mind. On issues for the future, based on uncertainties. These are:

  • Diseases
  • Famine
  • War

And separately: terror (recently there were statements by terrorist organizations to increase the number of attacks). Because while its urgency is enormous for the psychological effect it produces, its materiality is more limited than the other three.

  • Diseases can occur for various reasons. The climate can change in Western Europe in such a way that, for example, the tiger mosquito gets even more opportunities than it already has and, for example, brings Zika to us through the global supply chain. But diseases such as yellow fever and new variants of corona can also spread: through global tourism. Furthermore, migrants can also bring new, unknown variants of diseases that we naturally have, such as tuberculosis, to which our population has no resistance.
  • Famine was discussed much earlier by UN Secretary General Gutiérrez , who mentioned this issue. A possible cause for this is the drought, which in the long term could have a disastrous effect on the harvests in Western Europe. But also countries that close their borders for food exports, or can no longer export to our regions because of war such as the one in Ukraine. Whether a change of food source, such as switching to quinoa , will provide a solution remains to be seen. A change of diet, including more seaweed products, may be necessary, but the question is whether science and the food sector can react quickly enough to produce sufficient seaweed in a large number of varieties on a large scale. But the increased wealth in Eastern Europe can also play a role: will Polish and Hungarian drivers still want to drive in Western Europe to supply the supermarkets when they can earn the same amount by driving locally around their church tower in Eastern Europe? Even if the stocks in the countries in Western Europe were sufficient, the stores could not be supplied due to a problem of the supply chain.
  • War could be caused by water shortages in certain regions. These are so-called climate wars. But the war in Ukraine could also escalate. Or, with increasing political attention to problems close to home, terrorist conditions elsewhere could accelerate to such an extent that some countries think they must intervene militarily somewhere. And that in itself could cause terror in our regions. After all, there have already been statements from terrorist organizations that say that the war in Ukraine is an excellent situation to increase the number of terrorist attacks in the West. The question then is how efficiently the special forces of the police can continue to act under an increased workload due to a potentially increasing number of attacks.

These matters are uncertain, but they are already being discussed.

That means that through these uncertainties we have 23 = 8 possible futures. These are the possible combinations of famine or not, war or not, and disease or not.

If we limit ourselves to these three axes, we arrive at a 3-dimensional cube with 8 parts. By unraveling these, we come to the following conclusion:

  • In four of them there is war.
  • In four of them there is hunger.
  • In four of them there are diseases.
  • In one of them we have all three.
  • In one of them we have none of the three.
  • In three of them we have two out of three.
  • In three of them we only have one.

By raising these doubts, we are not pessimists, even if it seems so. It may allow us to look for possible indicators that tell us more about the direction(s) the world is heading in the short and medium term. We have to prepare for that. However, it is not getting any easier to determine good indicators in a fast-moving world, which are also timely enough to have predictive value.

Some questions we should ask ourselves are:

So what is the reasonable worst case for Business Continuity Management? What measures can we devise to be sufficiently resilient , without costing a fortune? Which measures cover several possible futures wholly or partly, so that strategic and especially in the global supply chain good decisions can be made?

How can we prepare and to what extent should we do that? When do they occur? How should we communicate about it? How do we break through the harmful law of psychology that states that what we are not used to is difficult to imagine, what we consider highly unlikely, and what we consider unlikely is considered to be negligible. What type of network leadership do we need? What is the role of who? Is it necessary to give everyone subsidiary decision-making rights? Or even decision-making obligations? How can we get people to develop sufficient trust in each other on such a scale? And how far does the geographical scope of the approach extend? Which partners do we want to involve, sectors, countries, continents…

But another question also arises: what is the chance that I have proximity bias in this reasoning because of the latest news reports? Or another kind of bias? According to recent studies in the UK, bias is said to be a pervasive problem. That thought also makes me insecure. There is work to be done. Perhaps for everyone.

Discussing the tragedy of the war

Author: Erik De Soir; photo by Karolien Coenen

For several weeks now, images of war have been a daily presence in our homes and we have been overwhelmed by the news of the fighting in Ukraine. It is not only war journalists and diplomats who are involved, but everyone is now a participant in the war that is taking place in Europe and threatening us all. Up to a few weeks ago, for most of us this was unthinkable! This war has generated a new influx of refugees and many of our fellow citizens are preparing to assist refugees and war victims once again and even take them into their homes. Many questions arise as to how to discuss the war with children.

Set out in the document below are ten practical tips on how to talk to people who have fled the war, left everything behind, and need to be accommodated in a foreign environment.