Applying Collective Intelligence inside Risk Management


I had been reading a risk management blog page today and has been very impressed with the technical write-up covering various facets of solvency and value of insurance market. As I had been reading it, the mind analyzed typically the information with admiration to various laws and regulations, sections, cases and so on. After finishing looking at it, I got a breath in addition to thought- "I truly felt like mentioning various books to know the article, will certainly a regular business operation employee actually realize it? " This specific resulted in a gloomy thought- "I perform the same, to be able to show my knowledge; I mention areas and case regulations of numerous acts which usually leave business men and women stumped. " Nicely, in my defense I will state, it gives an increased sense of satisfaction and success.

Somewhere I feel risk managers ( called RM) are getting their cake and eating it to. The main responsibility of managing risks is of business operation team. The RM's role is of the support function, the facilitator to the particular business. The company managers are not staying provided with the necessary information, knowledge plus tools to proactively manage their risks. Let me describe why I feel making this statement.

In their function as auditors, they will are centered on what went wrong throughout the past quite than equip the particular business managers in order to how to deal with the prospect. This can be a feedback instead than feed-forward program working. One other feature is that these people inside their role as advisors issue guidelines and policies without having the complete participation of the entrepreneurs.

Scenario 1: Let me take a scenario here of execution info assurance plans. The RM will discuss the overall requirement with all the organization managers, prepare the particular policy, take suggestions regarding it then issue the final policy. Then these people will tell organization users to implement it. Since within quite a few areas implementation may possibly not be possible, exceptions will end up being granted to the business users. In nutshell, around 74% of the insurance plan only will be implemented.

In equally these roles the particular involvement of company operations team is definitely minimal on the graduation of the project. They are anticipated to implement the recommendations.

Thinking about the above mentioned short comings in the earlier mentioned mentioned approach, My partner and i wished to explore the concept involving collective intelligence and even its applicability to risk management features.

Like a first stage, let us understand the nature of info and intelligence which often risk managers demand to conduct their jobs:

1) Company Intelligence- Information regarding processes, structure, tradition and technology. These they normally acquire from the organization administrators through interviews and even review of standard operating procedures.

2) Commercial Intelligence- Data regarding the exterior environment- customers, providers and competitors. This particular information they obtain from interviews using business managers, clients and suppliers. Various other sources are numerous media and exploration reports published.

3) Technical Intelligence - Information regarding typically the various laws, acts, methodologies and equipment applicable for threat management. RMs have the knowledge means conduct the chance management while making use of this information correctly.

As can be seen business supervisors have more information and knowledge in two of typically the three intelligence abilities required for performing risk management. Throughout a more collaborative approach the danger managers should get able to convey . their skill specialty area to the business supervisors effectively.

The question is how could this collaborative model work? Let us take the example again of preparing information assurance policies.

Scenario 2: In this particular scenario the RM puts up typically the objectives of preparing and implementing details assurance policies along with a table of contents plus broad outline within the intranet. Now this is ready to accept the employees to contribute and decide just how it should be developed in addition to implemented. The personnel comment on what exactly is applicable, how the particular process works, just what are the bottlenecks and challenges, who should review it, how it need to be implemented and so forth. The RM determines the major contributors and meets these people up to interview them. Based in the web interactions and meetings, the RM prepares a new draft policy document and uploads that on the intranet. Again the staff are invited to review the identical and supply feedback. Right after incorporating the suggestions, the danger manager earnings to have approval of the senior managers.

In this technique the RM provides the buy in with the employees before the finalization of the policy. Hence, setup will be much easier since employees experience a sense regarding collective ownership and even responsibility. This will permit adoption details guarantee polices within organization culture.


To help dig on the technique, I am adding the example which I read inside "Collective Intelligence- Creating a Prosperous Associated with Peace" fore-worded by simply Yoachai Benkler and remixed by Hassam Masum. I possess adapted the instance "Three ways to be able to storytelling" to the danger management function.

Three Ways of Story Telling- Risk Management Adaption

Allow us to formulate three societies for risk management: Red, Orange and Green. Every single society has particular procedures means conduct and discuss risk management activities.

Reddish colored: In Red culture hierarchical top decrease approach is used. All the risk issues/ observations can be reported by the particular risk management division to the CXO's. Business operation supervisor is necessary to go to be able to their respective RMs to discuss their own issues. A enterprise process team member has to path their risk issue/ query through the business operation office manager for the respective risk manager.

The more mature management issues the particular guidelines, policies plus reports for the enterprise operation team. Typically the business operation associates hear regarding the issues only from the senior managing and implement appropriately. In this circumstance, an employee's understanding of risk issues is at a general level controlled by the senior supervision. An employee's awareness and knowledge are based on typically the information provided to be able to him/her by the older persons.

Blue: In Blue society again hierarchical top down tackle is followed nevertheless with a moderate difference. Here the particular business operation administrator can bring up the risk issues directly to the CXO's interest. Then the chance management department plus business operation office manager work in collaboration to address typically the issue. In cases like this, a new change agent by business operation group can be selected to address the chance issue.

With this situation, the business functioning team members notice about the potential risks which often senior managers, RMs and their elected change agents inform them about. The employee's perception, knowledge in addition to awareness on chance issues are governed by this pick group. Though details is just not controlled since in the entirely top down method of Red, this is controlled simply by the major essential players in the commercial functioning team.

Green: Inside Green society the particular approach adopted toward risk management is of collective intelligence. Business operation team members can put most their concerns, recommendations and problems regarding risk management within the intranet. The other associates including typically the risk members would certainly discuss a similar about intranet and conferences, to suggest some sort of solution to typically the issue and offset the risk.

In this scenario, the company operation team users discuss the problems which in turn concern them. Presently there is no handle from a senior office manager about the topics to be discussed, in addition to no permission is needed for the identical. The flow associated with information regarding risikomanagement is through multiple channels- team members, organization managers, RMs and CXO's. The details which an staff has is intensive and he/she is definitely well informed about the subject. The perceptions and awareness is built through multiple causes of information.

The difficulty using the collective intelligence approach can get that employees need extensive information and on what base will they choose the relevance in addition to applicability of typically the information. How can the risk administration function operate? The particular adjacent diagram represents the steps with regard to using collective intelligence in risk managing activities.

The main benefits of this approach are:

1) Risk management department usually faces the task involving adoption of threat management practices by business operation staff. There are enough people that commence the process, however for execution a significantly better number must be proficient about the matter. This involves focused initiatives of building awareness and training. The expense of training in addition to implementation is therefore quite high. Together with collective intelligence approach a substantial mass of people happen to be mindful and knowledgeable about the issue. Hence, cost and time associated with implementation is lower.

2) Whistle forced is the just option which is usually allowed to employees to be able to bring a crucial concern to light. This specific has a great deal of negative consequences on the staff, management and corporation. With open connection, the employees will be able to be able to discuss the tiniest issue of corruption, illegality and deceitful behavior without hesitation. Risk of direct exposure will also lessen employees from indulging in such procedures.

3) One other feature is that this kind of approach fulfills typically the psychological needs associated with the employees. The particular approach offers a perception of ownership to be able to the business operation team and this specific motivates them to be able to implement risk options. The RM are adopting feed-forward method by guiding the business operation team into doing what exactly is right in the particular future. Instead of concentrating on providing some sort of critique on precisely what has been completed wrong in the particular past.


4) This specific approach encourages innovation and adoption of recent ideas. Employees ought to do their individual research and revert back with their particular feedback. They are not advised on what they must research on. Typically the diversity in thinking works effectively in providing better solutions.

5) Last nevertheless not the least, a sense of collaboration and even cooperation exists involving every one of the departments. It breaks down the surfaces which managers build to work in silos.

Do an individual think this approach is well worth adopting for risk management function? Presently, most organizations usually are adopting the Crimson and Blue community approaches to threat management. What according to you might be the inhibiting factors for implementing collective intelligence for risk management regarding Green society?

Another point not to get missed is which in turn I think may well be the unconscious agenda when I started exploring this particular concept. It significantly reduces the job and even responsibility of RMs. They can chill!

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