Risk blindness is not about missing out on data, competence or bad will, it is all about transparency!
The above illustration is recognized in the aftermath of risk scenarios as well as during performance management reviews of new projects, when their manifests are underperforming towards expectations.
The red line is the following painfull conversations, explanations and excuses for the AS IS situation.
In hindsight, many mistakes seem obvious. When we do take the time to evaluate potential risks, there is often not much that is profound about them. Yet so many of us fall prey to unforeseen risks, arguing that they came out of nowhere or that they could not have been anticipated. While this may be true is some cases, most of the time risk blindness occurs due to the way we think i.e. compliance and the organisational culture derived from the same, as we prefer good news to bad and have been struggling the line between critical and nonsense.
There are four main categories of reasons for risk blindness:
The first reason is that reward obscures risk. When things are going well, we tend to fly high and lose ourselves in the thrill of the reward. Departmental KPI structure, organisational pressure due to short comings on objectives or long period of success pushes organisation over the edge as we drift into ignorance and stop (if we ever did) looking for incoming disturbances. It is a repetitive finding ion all major investigations, that early warning indicators (EWI) were available but struggled to float upwards. We all known the main ones: Nasa Challenger, Montara (little known but happened 8 months prior to Macondo), Macondo, Piper Alpha, Danske Bank, Hurricane Katrina etc. A famous paragraph sitting above the Macondo incident is “BP forgot to be afraid”. My own experience is that when “confidence replaces competence” things will eventually go wrong. One could argue that organisations are lacking a fundamental methodology to support conversations as well as to proactively address concerns around the basics “What is my winning preventing me from seeing”. The general practice of working with separate systems of opportunity and risk registers. These are then risk assessed in isolation and by different SMEs, for which reason, the accumulated risk is potentially misperceived. The following decision making is potentially compromised as “known” concerns are either neglected or even left out.
The second reason for risk blindness relates to sunk costs. Why do we continue to throw good money after bad? And what is going on in your brains when we do this? The page of the business environment has challenged the basics of development of machines, process and especially how they interact. By insisting on worked based on single linearity i.e. compliance of man-machine interactions, we ignore the complexity building up as we shift into an environment of tangled network of man-machine systems. We copy paste the risk assessments from previous and are ignorant to the fact that they will be deployed into different environments with different interfaces to existing system. Once we are deep in, we are reluctant to stop and take on the losses. Our organisational cultures primarily praise the heroes of the visible, so little praise is given to those reflecting and take the losses in due time. The key mitigation to consider is to automate sunk cost analyses into your strategy process.
The third reason why we sometimes don’t see that we are heading straight to a wall is what could be called “future aversion”, the problem of assuming that because the future is unknown, it cannot be tested. As a result, when faced with decisions about the future, we may solely relay on present data rather than trying to assess and test the unknown. Furthermore, we often seek to avoid punishment due to errors, yet studies show that punishment improves learning after an error, so accountability drives behavior. To avoid falling into this trap, we have to become better to anticipate not necessarily the future, but how our copy paste of new emerging technology and methods into old environments create new outcomes. One could argue that the traditional Risk assessments methodologies are challenged on lacking on the concept of organisational intuition of future outcomes of exploiting new technology risk assessed in isolation and in the past.
The fourth and last reason relates to the opposite of blindness. Overreaction is when you act to overly cautious, almost anything becomes a risk. The closer an individual or Organisation has witnessed or been exposed to an upset, the severe the reaction. Many companies have developed an ethos of celebrating successes. The backside of this is we tend to react to blame. In combination with the challenges of working towards the Safety Principles of compliance (see other paper), numerous actions i.e. technical modifications, new procedures and updates and reporting initiatives are identified. These initiatives are flooding the organisation and the element of embedding these, will only result in a FEEL SAFE culture rather than a BE SAFE. After a period of 3-4 new incidents or upsets, one can imagine the buildup of work and learnings to be made. A significant amount of the initiated activities is never done nor embedded, this primarily due to new upsets occurring and becoming a new top priority. Related work pending in plans and schedules, are a blind spottet manifestation of earlier decisions have become temporary as they are not cancelled.
Risk blindness is something we are all prone to, and by awareness as well as proactively designing measures of controlling these challenges into your decision-making methodology and culture, we may be able to prevent much larger losses in the future.
DEFRAGMENTOR can support your organisation on the transformational journey to become risk aware in a simplistic and transparent way. Decisions are temporary, so obviously we need to be prepared to be unprepared as new upsets occur.
This will only be possible if potential concerns unhindered can be escalated vertically within the organisation for a value assessment of consequence. This to be prior to manifestation somewhere in the organisation and as a surprise to executive management.
Kim Petersen, 11/11/2022