Blog Post

“Reports that say that something hasn’t happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tends to be the difficult ones.” Defense Secretary Donald Rumsfeld February 12, 2002. ...

Lloyds recently announced that they’re cutting a large number of risk managers because the group was hindering “intelligent risk-taking” (Bloomberg). This will pan out in a couple of years either in the bank’s earnings results or fines from the regulators but, whatever the outcome, this is a good example of the risk manager’s dilemma: how to balance: The law and regulatory requirements The business’s objectives and culture The individual’s sense of what’s right The dilemma is that these three won’t always be in alignment. And often, they shouldn’t be: a risk management system works best when it’s under a healthy degree of tension. We want a robust back-and-forth between an aggressive COO and a cautious CRO. That’s going to help the firm take manageable risks without getting into too much trouble. ...

Before we jump in, don’t be put off by the technical aspects of this: the overall concept is pretty straightforward and something you can put into practice yourself (I explain how to at the end). Using the Right Tool for the Job Despite their incredible capabilities, even the best LLM*-based AI suffers from a tendency to exaggerate or make up facts – AKA hallucinate. That’s not such an issue when you’re asking it to help tweak some text or brainstorm ideas, but it’s a big problem when you’re trying to use AI for analysis. (*Large language model.) ...

We are moving too slowly The existential threat that businesses and many countries are facing currently is not from artificial intelligence, climate change, the danger of another financial meltdown or a conflict. The threat they need to address most urgently is an inability to move quickly and the events that we are facing far outpace our ability to understand, orientate, make decisions, and act. (Spoiler: it’s impossible to plan your way out of a problem. At some point, we have to take action.) ...

The DCDR agents made a mistake the other day. The vessel’s name was incorrect in the original report on the bridge collapse in Baltimore. Not just a little wrong, completely wrong: it was the name of an actual vessel, but one that didn’t appear in any of the details supplied to the model. (Thanks, Mark, for picking that up.) So, I’ve added some additional quality control checks to reduce errors in the reports without sacrificing too much speed. ...

Why the Industry is in Trouble Despite being the inventor of the first digital camera in the late 1970s, Kodak famously ignored the switch to digital photography, losing the company its commanding market lead and significantly hurting the business. Risk and crisis consulting is currently facing its own Kodak moment. AI and machine learning tools reduce the effort, time, and cost of routine risk and crisis tasks by well over 90%. Consultancies believe they can harness these efficiencies to improve their profit margins and assume that only the largest firms will want, or be able, to develop their own tools. ...

Lots of businesses are wondering what AI means for them, and it’s essential that companies have an AI strategy, even if that strategy is to do nothing. But even if the answer is ‘do nothing,’ you can only get there by asking the ‘what if’ questions first. But what are those questions? We’ll get to those in a moment, but here’s a quick recap of why this is such a difficult discussion. ...

AI isn’t finally here – it’s been here for a while in everything from the autocorrect on your phone and the recommendations you get on Netflix – but it’s now in the mainstream. And thankfully, we’re having some of the hard conversations we failed to have when other technologies like social media were emerging. These will be long, complicated, and potentially inconclusive discussions, but at least they’re happening. Clearly, a significant element of the discussion is around what AI means for work, and, as with most things, the answer is a variation of ‘it depends’ because every business and industry will be affected differently. ...

It’s always tough to answer the question, ‘How much damage does a reputational crisis cause?‘ Unlike a business interruption or accident, the cost of reputational crises is much harder to determine. Unfortunately, whether you’re in the early stages of a crisis or trying to get a leadership team to find a preparedness program, ‘How much could this cost?’ is the kind of thing crisis managers get asked all the time. ...

I wrote this on a beautiful sunny morning last week, sitting on the Isle of Skye, enjoying the sun washing over the mountains with a fresh coffee and a copy of business continuity principles. Different day, different highland view, but you get the idea OK, so I enjoyed the sunrise, mountains, and coffee a little more than the business continuity guide, but it was nice to refamiliarize myself with business continuity management (BCM) again. ...