Achieving Enlightened Decision-Making in the Polycrisis Era
Daniel Wagner | April 1, 2024
The convergence of a plethora of society-level crises has resulted in the birth of the polycrisis era—a term that was first used about a decade ago to describe the existence of multiple significant risks occurring at the same time. Although societal polarization, poverty, migration, pandemics, and geopolitical upheaval are perennial topics that have been studied intently for centuries, the intersection of politics, economics, finance, technology, the environment, and other factors that today collectively define the global risk landscape have fused together. The polycrisis era, therefore, embodies the multitude of interconnected, complex, and simultaneous crises facing humanity across multiple dimensions. 1
The component parts of the polycrisis era are, in their own way, potentially existential threats to individuals, nations, and the world. Climate change, pandemics, mass migration, and poverty threaten large swaths of the global population. Geopolitical upheaval has put the world on its most serious trajectory toward potentially severe interstate warfare between the great powers and/or among regional states since World War II. And threats posed by virtual terrorism and malignant artificial intelligence (AI) are now contributing significantly to the multitude of preoccupations borne by policymakers, risk managers, and philosophers alike.
Decision-makers are, as a result, in uncharted territory and have an unprecedented challenge on their hands. Given the threats these risks represent, conventional attitudes, methodologies, and tools used in decision-making are no longer fit for purpose. They require an upgrade, which starts with a deeper comprehension of these challenges and how to adapt approaches to decision-making to address them. Decision-making in the polycrisis era needs to be applied with keen insight, foresight, and well-considered intuition rather than emotion, reflex, or an overreliance on previous lessons of history.
For the risk management profession, the polycrisis era will be a time of tremendous difficulty and change—but also an opportunity—because decision-makers will be seeking to derive guidance from it. However, worryingly, many of the traditional approaches that the profession uses are not adequate to meet the challenge. They tend to treat risks as discrete events, whereas the polycrisis is characterized by hyperconnectivity. For instance, there is a connection between supply chain disruption risks stemming from virtual terror, climate change, and geopolitics. A shift in mindset and practices is required. Here are a few things that risk managers can do to start to rise to the occasion.
"Insource" Understanding
Risk managers need to have more than a superficial understanding of each of the dimensions of the polycrisis era and how they relate to one another. They need to be able to analyze and identify the most relevant factors and speak intelligently about topics as diverse as AI, geopolitics, climate change, societal polarization, virtual terror, and migration.
It is not enough to "outsource," for instance, the cyber security function. Rather, the polycrisis era risk manager needs to know when to bring subject matter experts to the table and how to facilitate collective understanding, as well as bring these insights together to assist in enhancing the quality of decision-making.
Change Focus
One of the problems with many traditional risk management approaches (in addition to treating single risks as discrete) is that they may exist and be practiced in isolation from when and how an organization makes decisions. This can no longer be the case.
Risk managers need to be laser-focused on "decision quality," helping decision-makers make the best possible decision given the information available at the time a decision is made. This means that sometimes a great decision may not work out. However, quality decisions add up over time to something meaningful and can become regularized.
In practice, this means that risk managers will need to enhance their skills in behavioral science and decision science and employ techniques from those disciplines in their daily work. Doing so will combine a range of risks and uncertainties holistically and to the direct relevance of decision-making rather than reporting about risks once decisions have already been made.
This also means discarding or minimizing risk management activities that may not be useful to decision quality, such as an overreliance on risk matrices, risk registers, risk appetite statements, and risk reports.
Embrace Curiosity
The existence of the polycrisis era implies that every organization will in some way be affected by one or more of these areas in this world of merged uncertainty. Since no one can be an expert in each of these areas, it is important to be able to understand and arbitrate between the complex trade-offs involved in making smart decisions in this era.
Downplaying the evidence and science available can result in making poor decisions, thereby creating bad outcomes for individuals, their organizations, and society more broadly. Additionally, an overreliance on science without considering nuance derived from combining qualitative and quantitative variables can also lead to poor decision-making.
This means that if risk managers are to add value to decision-making under uncertainty, they will need to be able to help those in the decision-making chain spot important trade-offs that may need to be made and have difficult conversations with decision-makers. That requires the courage to challenge those decision-makers and to be transparent with stakeholders about why chosen options were selected at the expense of alternatives, which requires cultivation of a decision-making culture that rewards—rather than penalizes—dissent among the ranks.
All of this requires an important character trait: curiosity. Curiosity enables risk professionals to probe deeper and to successfully navigate those difficult conversations by asking the right questions and looking beyond short-term concerns. Therefore, organizations should look for risk managers who have curiosity in abundance, and risk managers should develop this trait as if their jobs depended on it.
Conclusion
At no time in human history has the notion of uncertainty, risk, and resilience taken center stage as it has in the polycrisis era. Survival in the 21st century depends on our ability to harness risk, encourage bounded risk taking, and improve organizational and societal resilience. Our individual and collective decision-making capabilities are the chief actors in this drama.
If there is any profession that should be able to embrace the polycrisis era, then it is risk management. It is up to us to decide not merely to survive but to thrive in this unprecedented time.
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