While we were having coffee, the world changed... and risk management practices need to change yesterday
On 5-Sept join me, Greg Carroll, for the first of 3 short webex sessions on Mastering 21st Century Enterprise Risk Management »
Being a business owner I keep an eye out for marketing ideas. I use a switched-on U.S. based marketing consulting firm B2B Communications (@b2bcommunicate) who have educated me on 21st century marketing. Having a successful business for over 30 years, to say I am learning a whole new paradigm is an understatement. As a result, I have been following an Australian marketing guru Bruce Rasmussen (@bruceras), who just released interesting survey results:
Bruce’s research found that, “admirable traits such as 'building the relationship' and 'following up after the sale,' with which virtually all sales people have been brought up, are the staple approach in the ICT sales community. The only problem is that these behaviours are no longer considered to be best practice.”
A few weeks back I put forward the case that the character and modus operandi of Gen-Y is changing the way people will work in the future and the very traits we complain about may be the solution to our biggest problems. Gen Y vs. GRC (Governance, Risk & Compliance).
Blunt models fail
I'm finishing up a book titled Mastering 21st Century Enterprise Risk Management. In one of this book’s chapters, I cover the paradigm shift in Risk Management as raised at the 2013 OpRisk conference. This was supported by a Milliman research report that found:
1. Basic risk Indicators and standard formula are ultimately a very blunt model; and
2. Structural/ causal-based risk models are the leading emerging best practice in the field
In other words, the accepted practice is failing and there is an entirely new approach to risk management.
Then I watched a video on 3D Printing -- a technique used to produce physical products from digital designs. The Economist compares it to the invention of the steam engine and the printing press. Business Insider says it's "the next trillion dollar industry." And everyone from BMW, to Nike, to the U.S. Air Force is already using it every day. The Motley Fool Investment Advisors claim it will put an end to the Made-in-China era in the same way digital music downloads put an end to CD mass production.
The pace of innovation and adoption is accelerating. Google, GPS, the iPad, and DNA evidence are all the norm today. They were research projects just 20 years ago.
Accepted best practice in risk management has failed. The rate of technological change has accelerated. A fundamental change in business is happening, and a majority of businesses today will not be around in 10 years unless they urgently adopt major transformations.
Think I’m overstating the situation?... Ford, one of the largest companies in Australia for the last 50 years, is shutting plants.
Remembering 2013 like the Wild West
Just as the 1890's world of the Wild West disappeared without trace in the Roaring 1920s, so too will the business world of the 1990s, in which we still operate today, be long forgotten by the 2020s. When I note:
the Environment has changed,
the nature Selling has changed,
the nature Work has changed
the nature of Risk Management has changed
the rate of change of Technology has accelerated
the movement of Capital has accelerated
the intrusion of Compliance has accelerated
and Volatility is now the norm,
I feel like Sarah Connor (Linda Hamilton) in the last scene of Terminator driving towards the storm clouds on the horizon, thinking. “The unknown future rolls toward us. I face it, for the first time, with a sense of hope.”