“Prediction is very difficult, especially if it’s about the future!”
(Niels Bohr, Nobel laureate in Physics)
Emerging risks and new threats that are hard to grasp and estimate are a much-discussed topic. Add to that today’s increasing number of Black Swan events. These are unprecedented and unexpected events which nobody could have imagined, making them almost impossible to predict.
Experience shows that Black Swan events can, however, turn into emerging risks and can eventually be regarded as conventional risks and be treated as such in terms of standard risk management processes. Cyber risks, a blackout or pandemic comes to mind as typical examples.
Lack of patent recipes for complex issues
Strategic warning systems are thus gaining importance for both strategic management as well as for corporate risk management. In principle, this topic is not new in business theory and practice, but there is still a lack of “patent recipes” due to the complexity of this issue. This is mainly because, due to the lack of empirical data for such events, subjective assessments and evaluations can naturally turn out differently. Scientific debates on this topic can be traced back to the mid-1970s.
Back then, Igor Ansoff’s theory of monitoring weak signals was deemed a milestone in business management. Ansoff established that companies are surprised by discontinuity because traditional planning processes – if such situations have been considered in a timely manner – are not suitable. According to Ansoff, an arising discontinuity can be identified by increasing management’s awareness of weak signals, such as:
Both the system’s surrounding environment (external) and the company’s system (internal system) must be monitored. Ansoff also established that this process is a typical team task that involves creative techniques (e. g. brainstorming or scenario analysis) and requires an organised and formal approach. He also highlighted the fact that these changes pose risks as well as opportunities. Or, in the words of Max Frisch, Swiss playwright and novelist: “A crisis is a productive state. You simply have to get rid of its aftertaste of catastrophe.”
Black Swan events and risk management
In light of recent turbulences, universities have once again taken a closer look at ways to manage the unimaginable – i. e. managing the risks of Black Swan events – because traditional risk management quickly reaches its limits in the face of the unimaginable.
Harvard strategy professor Robert S. Kaplan discussed how one could even grasp the unimaginable. In doing so, Robert Kaplan identified three human traits as obstacles:
Kaplan therefore suggests two organisational alternatives:
To sum up: The more we are surprised and affected by new and unexpected threats, the more innovative, creative, and unusual the methods we develop must be to identify and assess these risks. Or, as Albert Einstein so aptly put it: “I’m more interested in the future than in the past, because the future is where I intend to live.”
Sources:
Ansoff, I. ”Managing Surprise and Discontinuity …“ in Schmalenbachs Zeitschrift für betriebswirtschaftliche Forschung (ZfbF) 28 (1976), page 129 ff
Kaplan, R. Harvard Business Review 2020/11

Christian Oppl
Dean GrECo Academy
T +43 5 04 04 260
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