| “What is the difference between a ‘risk’ and a wicked problem? Can you explain that?” That was the question of the day for me and inspiration to think about this distinction. I start from definitions of risk and wicked problem. Then I look for differences that follow from that. Both in nature and in approach. I conclude by asking if they can coincide. I test a number of things against the issues of ‘Covid19’ and the ‘War for Talent’. | In this text I write my own opinion, not that of any organization |
Author: Manu Steens
Content
Risk
Definition of a risk according to ISO 31000
A risk is the effect of uncertainty on achieving objectives.
Discussion of the concept of risk
Uncertainty
Explicitly, it says “effect of uncertainty”. However, people are bad at thinking about uncertainty. This is possibly due to the fact that people do not like uncertainties. People therefore prefer to translate uncertainties into probabilities.
Impact
The effect meant is the effect on achieving objectives. People tend to fear negative consequences when dealing with risks. As a result, people often interpret a risk in the sense of a threat and the effect as a negative, undesirable consequence, e.g. damage. Strictly speaking, a risk can also be a windfall. In that case, we speak of an opportunity.
Future Story and Bias
The fact that the definition explicitly states “uncertainty” implicitly means that a risk is a future story. And that likewise means that the exact probability is unknown. So as humans, we will make mistakes in estimating the probability. Humans sometimes make big mistakes against probability when dealing with risks, due to bias. Cases that occurred recently are overestimated in terms of probability. And that while people underestimate in terms of probability things that occurred long ago. That is a form of cognitive bias depending on how easily the issue comes into our minds.
Because the effect has yet to occur, and is thus a future story, we usually have plenty of time to think about the consequence/effects of the event. Bias can also occur in this process, such as “negativity bias” (“pessimism bias”) for example, or “optimism bias”. So the effect is uncertain, so the analyst cannot determine the consequences with 100% accuracy either, but with some practice he/she can describe the consequences comprehensively. The possible consequences, not the future actual consequences, are therefore reasonably knowable in advance. Provided one invests sufficient time in (often mental) research.
Analysis techniques
A comprehensive set of analysis techniques is available for performing risk assessments. (See also ISO 31010). These risk assessments are followed by measures, which can then be thoroughly discussed. These include both preventive and protective measures. These can be depicted on a ‘Bow Tie’: preventive measures usually reduce the probability of the risk event. Protective measures typically reduce the consequences after the event. In addition, measures exist in the form for sharing the risk possible in terms of probability, event and impact. Often through insurance against the event or its consequences, or by outsourcing a process to a subcontractor.
Approach
Causes largely determine the probability of the event occurring. To know them, one can brainstorm, such as with the “5 x Why” method. Once causes are determined, one looks for indicators. These help determine whether there is reason to think a cause is occurring or emerging. To this end, one develops EWS (Early Warning Systems).
Consequences largely determine the (harmful) impact after the event occurs. Then one starts brainstorming with the ‘5 x What If’ method, for example. Once consequences are thoroughly determined, one can also determine indicators for them. But often this is less useful. After all, one often does not know the actual total impact until afterwards. What is more useful are indicators that tell us whether the measures are effective. This allows one to adjust the situation from the event.
Wicked Problem
Definition of a “Wicked Problem” according to the Galan Group
“Wicked problems are tough issues that are difficult to solve. The issues are difficult to structure and control. No one knows exactly what is going on. Related words are ‘unstructured,’ ‘indomitable’ and ‘diabolical.'”
Discussion of the concept of Wicked Problem
From the text consultable on the Galan Group website, a number of differences with risks follow.
No need to estimate probabilities
A wicked problem is a problem that is already present. Thus, there is no need to estimate the probability of occurrence. The problem is already present. Yet it is not a crisis: it is not (no longer) acute, but chronically present. It may, however, be the result of a crisis. Like corona: that disease will not disappear easily, and carries the promise of still making waves with new versions of the virus.
Some difficulty in estimating the consequences
Not only is the issue difficult to master, it is often a complex one to contemplate. In the process, cognitive bias easily occurs again. To manage that cognitive bias, one can use “structured analysis techniques” in an attempt to estimate future consequences with minimal bias. However, due to the complexity of the fact and the chaos it creates for many people, one only knows the exact consequences ‘in hindsight’.
Approach
In this situation, the “5 x What If” method is especially useful. Another thing is to know where the consequences might end up like this. To this end, foresight and scenario thinking may be a possible start of approach. Because even a Wicked Problem can change, because of the VUCA world one finds oneself in.
Measures one can take against consequences are thus more difficult to identify due to the pressures of the situation one is in, as well as the complexity of the fact. Often one will take measures to mitigate consequences. So only protective measures are really possible in wicked problems. After all, the causes are often unknown, unclear or already behind us. So preventive measures are very difficult. Moreover, the future new normal is diverse in possibilities, due to differences in opinion and desire of often a large number of parties involved.
Sometimes a wicked problem can be “chopped into smaller pieces” and given a set of partial solutions. Sometimes this is a repetition of similar solutions. For example, with corona one first had the “golden measures” including hygiene, distancing and limiting social contacts, later a series of vaccinations.
Being original can sometimes help
An example makes this clearer. Consider the Wicked Problem of “War For Talent”. Some business leaders have a desire to win that war. However, it is not by simply providing the job with many benefits that one wins this war for talent.
A different perspective
Imho, above all, one must look at the problem differently. One does that by asking different questions in the first place.
Some of the questions involved are:
- What need will our organization have for university masters in xxx (lawyers, construction experts, HR, ICT, security experts…) in the next 5 years?
- What is the expected supply of these specialists on the labour market during that period?
- What strategic consequences does this have for our recruitment policy? (And which one for our internal training policy?)
- How do we attract talent?
- How do we retain acquired talent?
Remuneration policies that focus on higher wages are not usually just the solution.
That mainly attracts people with money hunger, and is actually a pure payment policy, not a multidimensional reward policy.
You might be able to attract some applicants with a package of benefits: Cell phone, laptop, work from home, office chair … But that is not, in fact, a reward policy for employing talent. It has now become a commonly acquired right in many organizations. Everyone has it, it’s the same for everyone.
A complex remuneration policy with higher wages depending on performance is especially interesting for young people, full of energy, who face high costs such as buying a house, a private car and so on. But it is one-sided.
Versatility as the start of a solution
Not that financial reward is a totally wrong approach, but it is too one-sided for a wicked problem like “War For Talent”. As soon as an opponent gives more pay, employees are gone. Still if that’s the only thing in the reward system.
So a reward policy should be more versatile. And tailored to the employee. What if the employee is a mother who values more quality time with her children? You can bond her with extra leave days instead of higher pay (regardless of the index, of course). Or a sapiophile employee who kicks off an MBA study? Who can be deployed to a management position afterwards. Or a project manager who is used to getting high levels in his gaming at home? You could perhaps challenge him by classifying projects into levels of difficulty, and challenge him for a higher level. Perhaps he/she already wants to do that himself. Also gamification can not only reward a team, but also increase team performance, and be a form of continuous team building. So a flexible HR policy is needed. Tinkering with that is part of the solution.
Finally, can a Wicked Problem be a Risk at the same time
One would argue not. Because the problem is already happening and the risk is yet to take place in the future. I only agree with this to a certain extent, because in my opinion it is also a matter of “stakeholder view”. As well for the problem, the threat and the opportunities.
An example can clarify this
Again, consider Corona as a virus. That caused a global pandemic in almost no time at all. That pandemic was first a chaotic crisis in the sense of the Cynefin Framework. It evolved through the political approach through a complex problem to a complicated problem that is now a Wicked Problem. ‘Corona is here to stay’ you might say. For the politicians, who must ensure that new outbreaks can be quickly suppressed, this is a Wicked Problem. They look at statistics across the population. They see vaccination as an ongoing solution.
Another kind of stakeholder is each citizen per se. Who has the freedom of decision to be vaccinated or not. If he does not, he runs the risk of Covid, with the additional options of long Covid, or worse, his death. If he does get vaccinated, he runs a small risk of heart inflammation, also with the additional option of his death. For him, each of these trade-offs is a risk.
A third type of stakeholder is the pharmaceutical sector. They also see corona as an opportunity. Developing vaccines is an investment, with a high potential return on investment. The whole world is a potential customer.