Thursday, 25 September 2008

Dealing with uncertainty

We think about business and operational disruptions as uncertain, ambiguous situations that we cannot structure. As a result, we do not know how to begin analysis and how to plan effectively. 

But, what if we start analysis by converting the ambiguous disruption problems into a small collection of risky ones and discover patterns that allow each of them to be analysed, then synthesised and managed. 

Risk, while not quite certain, is much easier to manage – we can list the alternatives we face, assign probabilities to them, and plan our responses and activities. 

If we manage to get timely information about the most costly causes of disruptions, we can capture early signals that enable us to recognise the most risky ones and take appropriate action to alleviate them.