The art of strategic risk leadership involves making strategic choices that generate the best outcomes. In today’s world, leaders at all levels confront multiple events or conditions pertaining to changing climate, disruptive technologies, digitalization, political tensions, vulnerable supply-chains, health crises, environmental degradation, economic recessions, and more. These conditions are ‘conveyors’ of multiple risk events notoriously difficult to predict, assess, and manage that influence how public institutions and private enterprises perform and thus call for new leadership approaches.
The risks that contemporary societies are facing are characterized by high degrees of uncertainty, ambiguity and complexity with many unknowns that mainly become visible as events unfold. The global financial crisis, COVID-19 pandemic, a global value-chain disruption, global political tension, and emergent climate change are recent examples. Many of these risk events have a systemic nature as they can disrupt the functioning of whole systems be it factories, organizations, infrastructures, and the entire societies that embed them. These emergent risks are also associated with the tough choices made in everyday decisions including which technology solutions to prioritize for increased efficiency, which policies to pursue in support of industry performance, which research efforts to prioritize for advancement of economic and social performance in a society, etc. The choices we make can have irreversible impact on societies, industries, organizations, and individual citizens.
‘Risks always depend on decisions, they presuppose decisions’ (Ulrich Beck, 2006).[i] That is, making decisions that has multiple options will inevitably affect various stakeholders in different ways. So, strategic decision-making implies that we attempt to make informed decisions considering who will be affected and how.
The current public administration system is not sufficiently equipped to address existing and emergent risks in its strategic decisions. The emergence of new risks and uncertainties call for institutional structures that can gather updated information faster for ongoing assessments of the evolving emergent public exposures. Even more importantly, there is a need for enhanced capabilities of public sector authorities to deal with risks and uncertainties, which require strong leadership to shape shared understanding among stakeholders and point the way forward in addressing these risks as they evolve. A collaborative public and private engagement is required as these risks affect organizations and societies alike.
It takes strategic risk leadership to make adequate choices and deliver public value to better prepare for an unknown but quickly evolving future.
[i] Beck, U. (2006). Living in the world risk society. Economy and Society 35(3): 329-345.