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SupaThink on Dynamic Risk Management

Artificial intelligence, machine and deep learning capabilities as well significant advancements in data analytics and quantitative modeling are all altering everything we do today and have the potential to significantly change how we do or think about our jobs going forward. Especially in risk management, this change will be significant and will allow us not only to better assess and manage risks but better "connect to detect and predict". In short, it will allow for a more "dynamic risk management" approach. However, this revolution or evolution will also require a more flexible human resource connection and a more nimble leadership approach and I wonder what leadership attributes will be most critical and valuable going forward?

One of the most valuable leadership traits, which I think will be mission-critical going forward, is an ability to envision the future and inspire a team to see purpose in the opportunities that future offers. In support of this trait, great leaders encourage comfort in ambiguity, but instill a level of responsibility and discipline to connect the dots, think outside the box and be comfortable with the fact that many situations are fluid, complex or unclear. They ensure that an organization's "tool-box" to make decisions is non-bureaucratic and non-siloed, that everyone is engaged in the process and that flexibility, nimbleness and openness to change are rewarded. I have read many case studies which point to how key decision-making processes are disconnected in an organization and how nobody is accountable for making the necessary connections. I think that the Financial Crisis ten years ago brought this to light. Then, the key criticism was an over-reliance on models, a lack of understanding the underlying assumptions and techniques as well as an inability to combine qualitative and quantitative information to adequately understand and manage risks. In a world of advanced artificial intelligence, machine and deep learning, making those necessary connections will be even more important. Great leaders will relentlessly focus on finding ways to encourage their teams to make these connections.

But, creating comfort with complexity and ambiguity to make connections is not enough. In a dynamic risk management approach, great leaders are not only comfortable responding to challenges and change, in fact, it brings out the best in them, but they also "create" challenges to guard against complacency and to avoid taking anything for granted. Keeping an organization alert or "on its toes" so to speak in a highly competitive, fast-changing and ever so increasingly complex world is mission critical. These leaders are able to foster this alertness by encouraging teams to challenge the status quo, allowing them to fail and motivating them to try solving the challenge at hand.

Dynamic risk management will require an organization to foster a culture and environment that encourages finding the joy and thrill in complexities as well as discovering the opportunities in uncertainties. I have summarized a couple key dynamic risk management principles which I think are very important going forward:

• Dig Deeper! Valuable information can be found in unexpected places. Internal and external near misses occur all the time, Look for the end-to-end process-chain grey zones as they usually also reflect accountability gaps. Make sure to "inspect" what you are expecting and never pre-conclude.

• Be Courageous & Challenge! Everyone agreeing is a red flag. Identification of smoke screens is key. If it seems to be too good to be true – it usually is. Involve everyone in the dialogue, but watch out for "Chicken Little" – as the sky just simply isn't always falling. Be comfortable that connecting and challenging creates discomfort.

• Imagine the Unexpected! Always re-invent your process – continuously innovate, change and improve your approach. Create a scenario-based mindset that allows for and not discourages creativity. There simply is no such thing as business as usual, support a "breaking the glass" mentality as chaos may give better direction. Patience gives us the time to expect the unexpected.

• Become a Teacher! Share what you know. Listen to what people have to say. Keep the conversation channels open, encourage a good discussion. Build trust. Push yourself before you push others. Encourage continuous learning. But remember that "what you say or mean may not be meant to be heard or understood"!

• Find Adversity! Conflict makes people think. Watch out that strong viewpoints, opinions and passions may prevent progress. It is important that we continuously push ourselves out of our comfort zones and that we don't rest on our laurels. Embrace a crisis – don't waste it!

• Find your Purpose! Strong risk management needs purpose. Find the power of observation to better predict outcomes. As leaders were are in servitude to others. Our role is to help our teams to find their purpose. Authenticity starts with you. Pay attention to how your environment shapes you. Stay true to your purpose!

• Keep an Open Mind! Encourage listening and remember that "listening" does not mean agreement. Establish a multiple-perspective vision. Be respectful and don't judge. Lead by stature not status. Always keep in mind that different constituencies have different priorities and goals. What worked in the past may not work in the future. Be open to new ideas and concepts!

• Execute! Always foster a positive attitude and an "it can be done" mindset. Take accountability for your actions, never throw others under the bus and walk the talk! Luck does favor the prepared only if they are willing to change their plans. Especially in risk management, a leader's continuous focus on planning, preparation, execution – and – having fun can make all the difference.

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