A conversation about Strategic Risk and Innovation
By Gina Belle
April 13, 2019
This week we had the pleasure of hosting a dinner at The Athenaeum Club, Pall Mall London that centred around a conversation about Strategic Risk, its governance and leadership implications, and its utility in energising and directing innovation activities. This event brought together a diverse group of guests from government, academia, not-for-profits and business, with disciplines spanning strategy & policy, risk management, artificial intelligence, the environment and investment.
Axilo knows that managing Strategic Risk in a changing world presents both challenges and opportunities. On the evening we had two speakers, our Chairman Professor Torben Juul Andersen and our Managing Director Luca Gatti. Together they painted a picture of how the thinking on Strategic Risk needs to change and how they have done so in their work and Axilo’s practice. Outlining our thesis that while Strategic Risk is ultimately about a disciplined approach to the uncertainty of a complex and fast-evolving world, effective management of it calls for well-structured investment in Portfolios of Strategic Options and the design of Strategic Innovation solutions.
The evening concluded with a lively discussion and debate on the importance of Strategic Risk and Innovation for good governance, responsive and adaptive stewardship and coherent renewal of human systems, institutions, businesses and social organisations.
We explored the distinction between uncertainty and risk, risk as measurable uncertainty, and the leadership and decision making implications of this view and approach. We talked about the difference between forming and taking decisions; in a context of uncertainty you can’t model your way forward, but you can learn your way forward. When you don't have data, you can learn, make sense, and apply judgement, but this requires a new disposition and approach towards strategic leadership and decision-making.
We acknowledged that managing uncertainty isn’t about avoiding ‘bad futures’ or creating ‘good futures’. It’s about building early awareness of what’s emerging, looking for insights earlier and more widely than most people do, and committing to learning over time how the dynamics of the external context might change, and in what ways this change is relevant and might impact an organisation. We discussed the importance of deciding how much resource (human and financial) should be allocated to managing Strategic Risk so that this commitment can be sustained long enough to build the intelligence, capability and strategic argument to take action.