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Briefing
MANAGING
THE FUTURE
[
Copyright March 2008, David
Hillson/Risk Doctor Limited]
Risk
management is all about the future. Of course we are also interested in
the past, to learn from what has happened before, to avoid making the
same mistakes again, and to capture opportunities that we previously
missed. But the main focus of risk management is looking to the future,
to see what might be coming, and to get as ready as possible. Risk
management is like a forward-looking radar, scanning the uncertain future
ahead of us, trying to pick out the main features, both good and bad. The
aim is to give us as much time as possible to decide what to do, with
enough time to actually do it. Then we can steer away from things that
might harm us (threats), and aim towards things that might help us
(opportunities).
As
we examine our risk radar screen and try to discern the various
alternative futures, we can classify them into three groups.
1. Possible
Futures
. Our first
task is to decide whether a particular future scenario is possible or
not. Of course we could imagine futures which are not theoretically or
physically possible, but these should be discarded quickly, without
wasting time on analysing them. But even after removing the impossible
ones, there will be a very large number of Possible Futures.
2. Probable
Futures
. These
form a subset of Possible Futures, because they are not just possible,
but they are more likely to happen than not. While we might not know
precisely how probable a particular future really is, we can make an
estimate, using both subjective and objective methods. Then we should
concentrate our attention on the futures which we think are most probable.
3. Preferable
Futures
. Perhaps
the most important futures of all are the ones which we decide are
preferable, the ones we really want to happen. Of course these should
also be part of the Possible Futures set, but they may not be among the
Probable Futures subset, at least initially.
How
does this "futures analysis" relate to managing risk? The role
of risk management is to ensure that Preferable Futures are Possible,
then move them into the Probable zone. The following four steps explain
how this can be achieved:
1. Understand
the scope of Possible Futures .
Standard strategic planning techniques can help here, including scenario
analysis, futures thinking, Field Anomaly Relaxation, visualisation,
trend-watching, or environmental scans. This step demands creativity and
innovation, to imagine a wide a range of possibilities.
2. Assess
the subset of Probable Futures .
This is the realm of traditional risk assessment, considering the various
Possible Futures and estimating how likely each one is to occur, and the
outcome if it did actually happen.
3. Determine
our desired Preferable Future .
This step requires us to clearly define our objectives. These describe
what we would like to see actually happening and what we intend to turn
into reality. Often we have one most preferred future, although there may
be a range of alternatives which are all good.
4. Manage
the future .
In the final step we take proactive decisions and actions in the present
in order to affect the future. By identifying the drivers in each
situation, we aim to maximise the chance of our Preferable Future
actually happening, while trying to minimise the chances of occurrence of
other Probable Futures which are undesirable.
People
often think that they cannot affect the future, and the present is all
that can be changed. Risk management takes a different view. Our
decisions and actions in the present can influence the future. We can
turn some Possible Futures into impossibilities, we can make some
Probable Futures less likely, and we can turn our Preferable Future into
reality. Manage risk and change the future!
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To
provide feedback on this Briefing Note, or for more details on how to
develop effective risk management, contact the Risk Doctor or
visit the Risk Doctor
website .
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