PwC on risk resilience:: you don’t want swans in your blindspot…or anywhere else!

In this report PwC follow on from criticisms of the “reach” of conventional risk management contained in the, AIRMIC sponsored, “Roads to Ruin” report that I have previously commented on. Whilst we should ALL be grateful that the subject matter is being kept on the agenda, it is disappointing how few “risk professionals”, insurers, brokers and business leaders are aware of the shortcomings of what is deemed to be accepted “best practice”.

It isn’t only me who has focussed upon the potential implications for business and, to a greater extent, the UK (if not global) insurance industry. Mactavish Consulting have been ringing the alarm bells for, at least, 2 years.

Here is what their own summary had to say:

Black swans turn grey is a thought provoking paper looking at how the landscape of risk is changing from a past environment where boards believed their organisations could manage and control risks to the present where established risk approaches and thinking are being repeatedly outpaced.

For organisations and boards charged with managing risk in this new reality, the fact that fundamental changes are underway is relatively easy to spot. But it’s much harder for them to define what’s driving this reshaping, and how they should respond.

By understanding the new risk landscape we believe organisations can begin to realise the key business benefits that will help them progress from managing specific risks to achieving wider resilience in the new risk and uncertainty landscape.

Our Governance, Risk and Compliance team have worked with clients and academics to develop our thinking and collateral on risk and resilience in order to deliver fresh insight on approaches and tools required to managing risk in this new reality.

In late 2010 I wrote – “Black Swans: A Corporate Governance “blind spot””

It appears to me that the most common mistake is (STILL) to assume we are dealing with “risk”…WE ARE NOT! There is even a major clue in the title of the PwC report “The transformation of risk”. Our challenge is to prepare for UNCERTAINTY.

The best advice that I have come across to date (apart from investing in Ontonix solutions!) is from Nassim Taleb (The Black Swan) himself:

Living with Black Swans: balancing the books in uncertainty