- It’s not enough to excel at a steady pace, firms also need the resilience to respond to irregular operations and conditions.
- Fresh off a year-plus of supply chain disruptions and irregular operations precipitated by the global pandemic, organizations should make time to rethink resiliency and risk management.
- There are times when there is a major disruption that suddenly implies what worked so far is not going to work anymore and you need a new playbook
Here are few benefits a company can get if they develop system-based thinking for risk management:
- Identifying leading risk indicators
- Formulating strategies for dynamically reducing risk
- Mitigating potential consequences from unanticipated events.
The 4 ways to develop a system thinking are:
1. Assumptions are not “just a good story” :
- Assumptions are the bedrock of risk models, but they are not infallible
- When an irregular event like a fire or pandemic happens, it’s common for companies to look back and question whether their assumptions were wrong or they were instead just unlucky
- One of the roles of technology is to keep checking assumptions in real-time and making adjustments
2. Be aware of the “hidden factory.” :
- In operations in most organizations, there is a system for what should happen and another system for what actually happens, whether that’s in a factory or an office.
- A significant portion of work is not done by the standard, but rather through workarounds that add up over time.
3. Think in terms of system design:
- Planning is essential for irregular operations, not improvisation
- Understand the boundaries of your operating system and think about what you’re going to do about it
4. Deploy technology wisely:
- Technology can help design robust processes and systems but should not be the goal on its own.
- Complex systems are inherently riskier; with that in mind, leverage technology to simplify a scenario rather than overcomplicate it.
To know more about a system based thinking for a sustainable model, do read this article: https://mitsloan.mit.edu/ideas-made-to-matter/4-ways-to-boost-enterprise-resilience-systems-thinking
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