Clumsy solutions to risky business

Posted on 20 November 2015

An academic from the York Management School has published a report for the Institute of Chartered Accountants in England and Wales (ICAEW) shedding light on approaches businesses can adopt to manage risk in challenging times.

Professor Philip Linsley, Professor of Accounting and Risk in the University’s York Management School, advocates the benefits of ‘risk mindfulness’ and developing ‘clumsy solutions’ for negotiating the difficult challenges presented by risk and uncertainty.

Professor Linsley conducted in-depth interviews with leaders in the risk management field to gather data on potential risks to businesses, and the best methods in premeditating and overcoming them.

He found that some of the most problematic risks are perceived to include cybersecurity, supply chain issues and the rise of social media and reputation management. These risks can present ‘wicked problems’, in that they are complex, multi-layered and it is often difficult to understand cause and effect.

Managers accepted that being able to predict and plan for all available risk scenarios is impossible. Best practice therefore consists of adapting to each issue by forming ‘clumsy solutions’ – these take into account differing viewpoints on how best to manage risk.

A ‘clumsy solution’ is a result of open debate across all parts of a business, ensuring people work together to be mindful of their risk management.

Professor Linsley said: “In recent years there has been an increased focus on creating resilient organisations that can withstand fluctuations in global events.

“Throughout the interviews, it was found it was important to accept it is not possible to create a perfect risk management system and that there are innate contradictions in managing uncertainties. Success in managing risk comes, in part, from having sufficient confidence to move away from following the company’s risk management system in a mechanical manner.

“The ‘clumsy solutions’ approach encourages risk management to become normalised and part of the ‘business rhythm’ of an organisation, and promotes a mindful, holistic approach. In turn this encourages a willingness to engage in robust and open debates about the best ways to tackle risk.”

Further information:

Risk management: mindfulness and clumsy solutions by Professor Philip Linsley and Dr Beth Kewell, Director of Studies at the London School of Commerce, is published by the ICAEW’s Finance and Management Faculty. To read the report, visit: www.icaew.com/riskmindfulness
To view the paper’s accompanying YouTube video, visit: https://www.youtube.com/watch?v=Y6z-uQ1TgAY&feature=youtu.be
For further information about the University of York’s York Management School, visit: https://www.york.ac.uk/management/
The ICAEW’s Finance and Management Faculty is a leading authority on financial management, the latest management tools and unbiased and independent information. For more information, visit: http://www.icaew.com/