— Rafael Ramírez is the James Martin Senior Research Fellow in Futures at Oxford University and author of “Business Planning for Turbulent Times: New Methods for Applying Scenarios” edited with John W. Selsky and Kees van der Heijden. Ramírez attended a session at the World Economic Forum’s gathering in Dalian, China, on managing global risks.
Reuters asked Ramírez to elaborate on five overlooked risks the world is confronting as it works its way through the current recession. His response is below. The views expressed are his own.
Risk one: Confusing risk with uncertainty
The first — and perhaps most important risk — is confusing categories of ignorance. This most centrally is about confusing risk with uncertainty. It entails pretending that probability (with data sets of past events with distributions of occurrence which are relevant for the future) is relevant for both “known unknowns” one cannot model with probability as well as unknown unknowns in one’s plausible futures where no data set is available, such as those of unique events.
Unfortunately, while the uncertainty that we became aware of as the financial crisis unfolded did not obey to the characteristics of “risk”, a lot of the policy interventions and “solutions” that were put in place pretended that the risks were known — and thus are well positioned to create new trouble. What we need to do instead is accepting that uncertain ignorance – for which forecasting, probability and risk are irrelevant – is now a common characteristic of our environment, and that we need technologies based on plausibility, like scenario planning. Plausibility is not going to be easy to implant in large organizations with established teams whose livelihood depends upon calculation of probability – but is necessary.
Risk two: Failure to link different types of knowledge
A second under-explored risk is keeping different forms of knowledge disconnected. This is typically manifested as keeping knowledge in the organizations that develop and use knowledge (like universities, corporations, or patent offices) in silos, while also ignoring that different scales create difficulty to translate applicability from small to large contexts and vice-versa. Failure to link different types of knowledge together, and to organize the architectures that enable this, prevents effective action. So the risk is that insufficient conversations linking different forms of knowledge will be made available, and that “solutions” in one context create (bigger) problems in others that have not been consulted.