Crowdsourcing Risk: Why It’s Gaining Traction

Classical business management relies on hierarchies reporting upwards and consolidating information at each level. In this model, every leader should have a clear understanding of what’s happening in the area of the business that (s)he is responsible for. When processes fail or people make mistakes the manager is able to identify the problem and take corrective action – and the organisation has a safety net in place because if a lower level of management doesn’t spot the problem a higher level will. Management reporting was, and is, all about getting the right information to the right people at the right time to be able to spot problems developing and either avoid them altogether or take corrective action. Managers identify operational risk from the data available to them and report the risk to the appropriate level in the decision making tree for corrective action. Now fast forward to the modern corporate world: – Virtual teams are commonplace, with different line management and operational reporting chains. Team members frequently report in different directions, and sometimes managers are unclear as to precisely who is looking after a specific aspect of operations. – Organisations change their structures much more frequently , sometimes at a rate of five or six times a year. This process can cause collective knowledge to be lost because it is part of the culture, not embedded in process – Change is the norm, not the exception, and part of the pain of change is management structures which are constantly catching up or responding All of these scenarios lead to visibility of operational risk being lost as the pace of business change accelerates. Researchers, such as Leif Eriksen and Paul Proctor at Gartner, are beginning to document the phenomenon on a wider scale.

This week’s articles: When nobody (and everybody) is the boss Gifts of Sight: Put Risk Management And Strategic Planning Together Who Knew the Risk? Everyone But You

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