How to prevent and manage risk while achieving sustainability?
TankTerminalTraining in cooperation with Creazene.org offer a new training program based on research about causality of Risk and Sustainability in the energy sector. It shows that 79% of risks can be contributed to human decision making. The other 21% of risks are caused by non human influence such as weather, floods, volcanoes, drought, earth quakes, etc.
Once we understood this, says Arend van Campen, leader of the research team, we then looked at decision makers’ awareness, motivation and if they were able to understand their company or organisation as a living organism. Also an important question was if they were approaching Risk and Sustainability from a mechanistic or reductionist position or from deontological motivation, their duty.
This was needed, because rational, mechanistic thinking usually only understands and deals with linear causality (direct effect), but have sometimes difficulty to understand non linear causality (indirect and unpredictable effect).
The latter is the case. Because risk management is often seen as a tool that is to be applied after a risk is recognised, such as compliance to regulations, adherence to laws or covered by some form of ISO standard, decision makers are still often unaware of a manner to prevent risks by understanding them being systemic, interrelated, interconnected and interdependent and therefore preventable and controllable.
The research team used Systems Science to determine that decisions were often not made by looking at the whole, but rather were made by looking at parts.
Our question was why and we came up with a tool, copied from nature we now call ‘Risk Contemplation Tool (RCT)’, which works exactly as nature does. Nature is reality. Nature does not choose sides, it has no motivation or purpose, at least not for the time being, than to create and support life.
Businesses however do not always think like this. Their motivation sometimes does not place life or sustainability as a priority, but aim for profit, economic growth, success or financial gain. Such motivations are in themselves not harmful, but can become that because these usually do not take into account possible negative effects on the entire network of relationships of which they too are a part.
For example; a mining company buys a copper mine in Africa, but to expand the mine, local communities are coerced to move from their ancestral lands. The Mexican Gulf Macondo disaster was caused because of haste. Enron, already a while back, imploded because managers were making decisions only on that information which would confirm growth. Volkswagen will be paying billions in fines and buy backs, because they tried go beyond reality. Fracking causes uncontrollable volatile effects, and so on. Examples of such costly effects are: paying expensive compliance and legal teams, exposure to law suits, reputation damage, tarnishing of a brand, etc.
A very simple scientific fact is: ‘we cannot control nature, we only disturb it.’ Reality is real. Nature deals with what is real and will react on everything what is not real or disturbing it in an uncontrollable, unpredictable manner.
Nature works as follows:
• Maximum Efficiency
• Minimal Energy
• Principle of Maximum Grace
• Intricate order
• Multiplicity in Unity – Emergent Properties
• Maximum Coherence to the whole
Telling untrue facts about a product or service, directly causes vulnerability and imbalance resulting in overwhelming outcomes: for example: personal remorse which cannot be ‘switched off’ and societal distrust.
Simply put, we can benefit of using this inescapable reality in nature to create a thorough and preventive Risk Management System:
1. Allow and use all (as much as you can) information to base decisions upon. This information is called: feedback.
2. There are two types of feedback; positive (amplifying) and negative (dampening). Positive feedback (information which confirms purpose such as more profit, more success, growth) needs to be corrected, slowed down (dampened) and balanced with information such as warning, caution, awareness of limits in growth through one of our innate survival mechanisms: our conscience.
3. They form so-called ‘feedback loops’ which can be used as a cybernetic steering mechanism.
4. To avoid or prevent risks, we can direct our organization, just like a helmsman does, to stay on course within natural boundaries of functionality (natural law). This means always within natural environmental and planetary limitations.
This ‘risk contemplation tool’ or (RCT) which organisations could implement is that if they do not constantly correct course and balance decisions on the acceptance of ‘all’ information, including ‘inconvenient’ information, many case studies prove that any process without the adjusted balance of feedback loops becomes unsustainable. If it does not allow this steering principle, a direct consequence, confirmed by mathematics, physics, ecology, biology and systems science, is that the whole organisation will become instable as it enters a realm of non-linearity, also known as Chaos Theory or Butterfly Effect
RCT could therefore become the control and sustenance tool of preference and could replace many rules, regulations or laws which in fact impair an organization’s functioning. Rules and regulations can become ‘guidelines’.
When a board of directors or management team finds itself in a compromising position which would ask of them to pursue the allowance of positive feedback only in order to achieve a pre-set goal, they immediately are warned by RCT that the outcome of such a goal or purpose will be unsustainable. The pre-set goal could be beyond nature’s and environmental allowance to condone it.
If we ignore RCT as we have done since the time of mechanistic thinking separated our minds from our bodies (body-mind duality) about three-hundred years ago, our planet will not allow motivated decision making by positive feedback alone much longer. The conditions supporting life have for a great part already been destroyed by ignoring negative, but correcting feedback. Such is the law of nature. We are a part of nature and have the ability (choice) to navigate our vessel back into safer waters or be shipwrecked.
Linear Effects change into Non Linear Effects
79 % of global risks are caused by a human tendency to only use preferred information which confirm purpose.
Gregory Bateson, once of the first Cyberneticists once said: ‘The major problem in the world are the result of the difference between how nature works and the way people think.’
To understand what this could can be explained by this example from the Tank Terminal Storage Industry:
When an oil storage terminal is asked to store and blend fuels of which it knows they could have harmful effects on people and environment of countries that would import and use them, their management can use the RCT to investigate potential non-linear effects in cooperation with the energy company it rents the storage tanks to. RCT can be used to verify if (all information), positive and negative feedback, will be accepted and kept in balance. If not, then a deal should not be made, because uncontrollable effects will destabilize the businesses of both parties. This is an inescapable scientific fact. The next step then would be to suspend and phase out the production and distribution of harmful fuels and replacing them by clean fuels. RCT could be applied to any business, industry or political process. It asks: could my organization have damaging non-linear effects on human and non-human life, the environment and social cohesion? It the answer is no, proceed, if yes, adjust the process.
A long term vision
The value of RCT is that anyone in any business or politics does not have to feel pressured or be anxious any longer. A manager can use RCT as a sufficient natural reason and economically sound excuse to negotiate mutually beneficial deals without the fear of competitive economic disadvantage. With this tool in mind managers will always be looking for sustainability in line with what nature demands. Managers understand it will be in their best interest and reputationally beneficial. This leads to personal health improvement, reduces stress and anxiety, enhances safety levels and ensures environmental protection. A win-win situation.
This study could be regarded as that negative feedback loop which would help restore the economic and natural equilibrium. It is quite easy, don’t ignore it and just mimic nature.
Arend van Campen, MA