Friday, September 4, 2020

Critical Thinking & Risk Management

Critical thinkers are willing to integrate new or revised perspectives into better ways of thinking and acting.

Digitization brings unprecedented opportunities and risks to today’s organizations, you should apply multidimensional intelligence to make clear discernment, apply critical thinking skills to solve thorny problems effectively. In fact, companies that get stuck with their old ways run the risk of being rapidly disrupted and gradually become irrelevant. Risk management needs to lift up from risk control to risk intelligence which can identify the potential business growth opportunities, prevent or manage risks effectively, and drive transformative change smoothly.

Critical Thinking plays a crucial role in identifying and understanding different types of risks accordingly: We live in an era, full of uncertainty, complexity, ambiguity, and ambiguity, etc. The result is higher risks of conflict and inertia. There are strategic risks and systemic risks, there are financial risks, operational risks, or regulation risks, etc. Critical Thinking plays a crucial role in identifying, preventing, or managing different types of risks accordingly. 

Strategic risk is knowingly assuming a risk because it is believed that the potential reward outweighs the potential downside. Systemic risks concern the external factors that can affect the delivery of any set of business objectives. It is a macro view of the entire system or significant chunks thereof. Organizations should tailor their methodology and approach to manage various business risks effectively. 

Critical thinking enables the management to improve risk-intelligent decision-making: The “VUCA” reality brings both abundances of business opportunities and the flood of high potential risks, any business can be at risk for survival at any minute due to continuous fast-paced changes and continuous digital disruptions. Critical thinking enables business leaders and professionals to analyze and synthesize business dynamics with inherent variability and the unknown inter-dependencies among sources of risks that could have an effect on the delivery of business goals or objectives. 

Critical Thinking helps the management improve risk-intelligent decision-making effectiveness, and foster criticality in various business management disciplines such as business resilience, predictive compliance, the ability for early diagnosis of non-compliance, or reducing audit failures, etc.

Critical thinkers are willing to integrate new or revised perspectives into better ways of thinking and acting: Critical Thinking implies some logical reasoning, systematic methodology, employing and applying the criteria deemed appropriate by the thinkers involved, to arrive at the tangible and reproducible truth, with the goal to improve risk management effectively.

Further, critical thinkers show the willingness to imagine or remain open to considering alternative perspectives, willingness to integrate new or revised perspectives into better ways of thinking and acting, and willingness to foster criticality in others, so they can identify risks clearly and manage risks systematically.

Critical thinker leaders can mitigate risks and improve organizational risk management effectiveness and intelligence: You cannot manage risk, or for that matter, build a risk management capability without first understanding the "business value of risk management." The risk manager should apply critical thinking skills to make an objective assessment of their risk management systems and tools, identifying risk management blind spots and the root causes of business problems, the organizational risk assurance system robustness and maturity, etc. They leverage diverse critical thinking perspectives to mitigate risks and improve organizational risk management effectiveness and intelligence.

Digital leaders and professionals must leverage critical thinking as an effective tool to deal with high velocity and complexity, understand the variety of risks, prevent potential risks or what can be done to make business more resilient, manage risks effectively, identify some opportunities, well prepared for the possible disruptions, and move the business forward at a steadfast speed.


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