Crisismanagement

War and Strategic Risk Management

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Author: Manu Steens

In this text I write my own opinion, not that of any organization.

By now everyone has an idea of what war means, which is why I start from a different starting point for this blog, strategic risk management.
Most people understand the concept of risk and understand mainly the operational risks, such as human error and system errors, but what is meant by strategic risks?

A strategic risk is a risk associated with an organization’s strategic decisions. A strategic decision can be any decision that determines the long-term survival of the organization. Such decisions are made within the framework of the mission and vision of each organization and have some consequences for the concept of risk.

A specific strategic decision is usually unique. Singular, so not frequently repeated throughout the history of the organization. The associated risks are therefore exceptional in nature and have no prior history. Determining the probability (‘p’) of occurrence of such risks (‘R’) is therefore always a perilous undertaking. They are pure unknowns and pure uncertainties. But, on the basis of rigorous thinking, one can indeed determine its impact (‘i’). The definition of risk as a product of opportunity and impact (R=p.i) therefore, in my opinion, does not apply to (most) strategic risks. As a result, they have a gap in their evaluation compared to traditional (often operational) risk management. This gap manifests itself in uncertainty.

Starting a war is such a strategic decision. The chance of success (with success as an event) is a priori unknown. So winning the war is an uncertainty.

What happens to uncertainties? People can’t handle that very well. We prefer certainties, even if the associated chances of risks are small. People want to know their chances and look for remedies. One such means is ‘uncertainty absorption’. This has a lot to do with systematically explaining away uncertainties, and replacing them with (personal) certainties.

Uncertainty causes stress and stress reduces the capacity of reasoning and deciding. Some even feel anger rising and we all know that making decisions in such a state is not optimal. That is precisely why we use a different phenomenon. We do a lot of mental gymnastics to replace uncertainty with an illusion of what we consider to be a credible certainty. This replaces a series of possible future outcomes with a single estimate.

To make that assessment, we use the past. We scan our history for similar situations and then we state that the past predicts the future. We use broad estimates of similar situations. This is necessary because the strategic decision is so unique. People start to cherish analogous reasoning and pay too little attention to the differences with the present. When the past gives that false sense of certainty, we eliminate any perception of unpredictability.

Uncertainty absorption can thus be defined as “The search for inferences in a large body of evidence. Then we communicate similar cases instead of the actual evidence from that body of evidence.”

A phenomenon that takes place at every layer of an organization.

One reason uncertainty absorption happens, even in warfare, is because many leaders don’t stand with their bones in the mire of the trenches. That way they don’t want to know what could happen, they do want to base their decision on a single possibility. Illusion goes through similar things to interpretations to move on to possibilities, probabilities and certainties. A wide spectrum of possibilities is thus reduced to a single one. As a result, the decision-maker in the C-suite is severely limited in his judgment as well as the correctness of his view of the future.

An important consequence is that strategy is determined by people with a adjusted version of reality. The further away the leader is from everyday reality, the greater the gap between strategic objectives and the actions to carry them out. As a result, it is difficult to answer the four important questions of strategic management correctly:

  • A: What unique value do we want to deliver to our customer (in a war: ‘our’ citizen)?
  • B: How do we create that value?
  • C: Where do we create that value?
  • D: How do we secure that value from disruption (in the future)?

If we take as a case the situation of the Russian population in Ukraine, before the start of the invasion, then there are some reservations to be made on the basis of these four questions.

  • A: It seems ok to me to want security for the Russian citizens in Ukraine.
  • B: Putin chose war. (The question is whether this makes sense with question D.)
  • C: He wants to create that security in Ukraine.
  • D: Securing the safety of one group can never succeed with a war against another. There was already a lot of resentment through the past and that resentment is only increasing with this war. In the long term, he thus creates a more unsafe situation.

This strategic decision (waging war in Ukraine) therefore entails the risk that the insecurity for the Russian population in the future Ukraine may be greater than before.

Unless the ‘trick with the pigeon would work’, as he applied it to the Chechens at the time, which made them obedient partners. In short, the strategy in the war in Chechnya was: hit them, don’t kill them, reach out to them and then rebuild their country. That this can work here, however, is uncertain because many Ukrainians have fled the country, and that in numbers that the Chechens could not. In my opinion, this ‘trick with the pigeon’ will not work here, with the main reason being that the leader is too far removed from the actual situation.

(for your information: https://historianet.nl/maatschappij/geschiedenis-van-rusland/tsjetsjenie-van-ruslands-zorgenkind-tot-poetins-jaknikker)

Extinctions

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Author: Manu Steens

In this piece I write my own opinion, not that of any organization.

I recently read a very small book: “Extinction – A Very Short Introduction” by Paul B.  Wignall. (Oxford University Press) In it he talks about the various extinction waves that have happened over millions of years. In doing so, he indicates the probable causes.

He gives an overview of the possible probable causes and their course as follows (he starts from the geologic workings of the Earth):

The author gives a comparison of the proposed mechanisms for all mass extinctions in a table as follows (LIP = ‘Large Igneous Provinces’ = extensive areas of ‘flood basalt flows’):

At the end of the table, I took the liberty of adding the current situation. Whether this suggestion to an interpretation is the right one is almost certain. What I don’t think works is putting money into a fund for ‘the end of the world’.  As António Manuel de Oliveira Guterres recently said on the occasion of the climate summit in Egypt: “Our Earth is in the ‘Emergency room'”. In my opinion, largely reconfirming the decisions of the previous climate summit is insufficient. The frog was put in a pot of fresh water and can now be boiled to death, is my interpretation. Earlier CO2 explosions happened over millions of years, now in a hundred years.

What is one of the biggest dangers? I believe that it is this increase in CO2. It is not the case that if the CO2 concentration stagnates, global warming will do the same. The relationship between the two is not that of an on-off controller. When CO2 emissions on earth are ended tomorrow, the warming-up will not stop immediately, but will shoot through to a maximum, and then return to a lower temperature. Only after a number of temperature fluctuations will a new balance be found.  This is called a transitional phenomenon. It is therefore questionable to set 1.5 °C as a criterion. Especially if that criterion is repeated when the increase is already in full swing.  Hence linear models and decisions are out of the question.

The climate problem is a continuity problem. How do you go about that?

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Author: Manu Steens

In this article I write my own opinion, not that of any organization.

In the month of July I mainly read in the book “Drawdown – The Most Comprehensive Plan Ever Proposed to Reverse Global Warming – edited by Paul Hawken”.

This book contains 100 interesting reports of climate-saving measures. In addition, there are innovative ideas in it. One of them caught my attention more than the other, because it seemed so miraculous to me: ‘artificial leaves’. It says that on June 3, 2016, Nocera and Pamela Silver announced that they had succeeded in making high-energy fuel by combining solar energy, water and CO2. By using two catalysts, they have obtained free hydrogen gas from water. By feeding this to the bacterium Ralstonia Eutropha, it turned it into liquid fuel. If the bacteria were fed pure CO2, the process is at times as efficient as photosynthesis. If they extract the CO2 directly from the air, it is three to four times more efficient as photosynthesis.

A few pages later it was about the technical capture of CO2 from the air. (This is called DAC or direct air capture.)

You can already see my idea, the idea of DAC that Bill Gates also proclaimed in his book is useful to feed this ‘trapped’ CO2 in a higher concentration than in the air to this bacterium. If you realize that on a large scale, you organize a potentially closed cycle for the creation of pure air on the one hand and fuels on the other. For the time being, there are economic obstacles. These may be surmountable in the long term. Time that we may not have, so it will be useful should governments intervene.

However, that is not the only issue I would like to refer to. We are already in the process of further heating an overheated planet. It will prove to be an insufficient effort if we try to save the planet by only creating a sustainable cycle in fuel consumption. After all, we are in the midst of the transitional phenomena of rising greenhouse gases. Halting the increase in CO2 does not guarantee a stop to the evolution of the climate. At most, it will slightly adjust the evolution. A CO2 reduction in the atmosphere must be done – quickly.

Fortunately, there are plenty of possibilities described in the book. That’s a plus. However, to call this book a ‘plan’ as the title does is an exaggeration.

We have a number of things: for each solution (except for the innovations that can still be proven and developed), we already have at a deadline of 2020-2050:

  • The potential number of Gigatons of CO2 reduction
  • The net costs (financial investments to be made)
  • The net savings

For a plan we need some extra things. We have some additional questions:

  • Where on earth is each of the proposed solutions most efficient and where is it most effective?  With what deadlines for which carbon storage method?
  • How do we convince local politicians to make the budgets sufficiently free?
  • How and where can some solutions be combined?
  • How do we shape humanity’s behavior into the right behavior in their own environment?
  • How do we convince local politicians to make measures enforceable?
  • How do we convince local governments and the private sectors that there is a lot more money to be made from creating a livable planet than from continuing to parasitize on it? ‘Drawdown’ already gives a start with numbers.

Conclusion:

So the issue I have is that governments  have to work together at an international level. That they write studies to create a globally supported plan and then implement the same plan worldwide. CO2 neutrality is not sufficient. CO2 reduction is needed. If there is no plan with deadlines and control over their implementation, the book ‘Drawdown’ will remain what it is today: a result of a well-thought-out research on a number of small and large noble initiatives that are being disseminated and have potential. It would certainly be a pity if the opportunities to secure the continuity of the planet and earn serious money from it are not taken. That will require sacrifices. Especially from people with a large CO2 footprint. There is a danger that individualism will prove to be the biggest obstacle. Individuals are not going to solve the problem. However, it is the first priority.  Pressure from below will be needed.

Why can camaraderie be a pitfall in crisis management? Is collegiality an answer?

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Author: Manu Steens

In this article I give my personal opinion, not that of any organization.

This article is inspired by “Chapter 10 – Fairness, Diversity, Groupthink and Peer Effects: Why Other People Are Important to Our Risky Decisions” from the book ‘The Ten Commandments of Risk Leadership – A Behavioral Guide on Strategic Risk Management’ by Annette Hofmann.  She gives the following law of risk leadership:

“Teams with great diversity with defined rules for communication and collaboration make better decisions.”

Research shows that teams need collaborative assignments/tasks, known rewards, and defined objectives to have a psychological sense of security and to promote productivity. Conflict can be good. If we aim for a good decision-making process, a diverse team with specific communication and cooperation rules is needed.

How does this relate to pure camaraderie? The first question is: what do we understand by camaraderie?

At https://www.vertalen.nu/betekenis/en/camaraderie , the term is defined as:

  • camaraderie among colleagues
  • “the quality of affording easy familiarity and sociability”

In my ideal image of a group of comrades, everyone is equal.  It is seen that when they  want to organize something among comrades, they looks at the natural leader.  And therein lies a hidden dangerous factor in the behavior, namely groupthink.

The original description of groupthink is by Janis (1991):

‘A mode of thinking that people engage in when they are deeply involved in a cohesive in-group, when members’ strivings for unanimity override their motivation to realistically appraise alternative courses of action.’

 It occurs when certain antecedent conditions (symptoms of groupthink) and a defective decision-making process are present.

The most important antecedent condition is a ‘cohesive group’. A similar other is isolation of the group. In both cases additional opinions and advice from third parties cannot end up in the group where they need to be. And are therefore not considered.

In addition, the attitude of the group leader is important. Especially when he selectively favors people in their opinion (often his own). Or when the group is homogeneously composed of like-minded people.

A third antecedent condition refers to provocative situational contexts. For example, in case of extreme time pressure, one chooses the leader’s solution, because one sees no other way out or considers nothing else as realistically feasible.

In addition, members with low self-esteem like to seek confirmation within a group and are averse to contradicting others (with group consensus).

Complex and moral conflicts can also affect an individual.

Symptoms of striving for unanimity are:

  • Illusion of being invulnerable.
  • An inflated level of optimism.
  • Increased willingness to take risks.
  • Blindness to warning signs and impending failure.
  • The belief that you are unstoppable.
  • The conviction of moral superiority.
  • Stereotyping of other groups.
  • The conviction of superior intelligence.
  • Considering negotiation with other groups futile because the other group is seen as incompetent and weak.
  • Underestimating the opponents.
  • Collective rationalization of one’s own great right.
  • Direct pressure on dissenters in the group.
  • The oppressive person presents himself as a sentiment guard.

Lesson learned from this could be that a strong cohesion of the group is one of the most important contributions to groupthink.

Groupthink needs strong feelings of solidarity and the individual desire of the group members to have good relationships with each other. This is often seen in comrades in a cohesive group.

The correlation between groupcohesion and groupthink is rather weak. But there is one. ‘Debiasing’ strategies are therefore needed.

A group with a strong leader is vulnerable to groupthink. Or if one is unsure of having a dissenting opinion.

  • Self-leadership is important for risk leadership to build self-confidence. For this, the interpersonal sense of safety is important.
  • Against homogeneity of the group and groupthink, third parties can be involved in the story. Often these are consultants.
  • Letting the group leader express his opinion last is useful to let others express their opinion for themselves. This is important for the impartiality of the leader. Otherwise, there is a danger that in the group
    • less information is used;
    • the leader exerts too much influence;
    • fewer proposals for solutions come on the table
  • In addition to personal safety, constructive conflict is beneficial. This is because differences in team members’ opinions, ideas, values, and ways of thinking are important to learn to work together optimally. This is best done with a high degree of interpersonal safety.

Conclusions:

Leadership is a double-edged sword because:

  • leadership can prevent groupthink by being aware of the antecedent conditions, the symptoms of groupthink, and symptoms of defective decision-making processes;
  • strong leadership can kick-start groupthink.

The camaraderie should not be ‘fictitious’: one must continue to dare to challenge the other. Otherwise, one is too easily impressed by the opinion of ‘peers’. After all, higher  social interaction also  increases this effect.

The culture in the crisis team is important. If in an organization one does not have the habit of expressing one’s own opinion in a crisismeeting, then this groupthink provokes a lower qualitative decision-making process, with higher chance of mistakes.  It can go so far that people expect you to keep your idea to yourself. With all the consequences for the quality of the decisions.

A well-known example of such groupthink was the disaster with the Challenger on January 28, 1986.

Another well-known example is the Chernobyl disaster on Saturday, April 26, 1986.

Consequently, it is best to work from a collegiality based on free expression. This may involve aspects of camaraderie, as a catalyst. Not as the main characteristic of mutual behavior.

Discussing the tragedy of the war

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Author: Erik De Soir; photo by Karolien Coenen

For several weeks now, images of war have been a daily presence in our homes and we have been overwhelmed by the news of the fighting in Ukraine. It is not only war journalists and diplomats who are involved, but everyone is now a participant in the war that is taking place in Europe and threatening us all. Up to a few weeks ago, for most of us this was unthinkable! This war has generated a new influx of refugees and many of our fellow citizens are preparing to assist refugees and war victims once again and even take them into their homes. Many questions arise as to how to discuss the war with children.

Set out in the document below are ten practical tips on how to talk to people who have fled the war, left everything behind, and need to be accommodated in a foreign environment.

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Discussing the tragedy of the war

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