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Risk Management Theatre: On Show At An Organization Near You

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Risk Management Theatre: On Show At An Organization Near You

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One of the concepts that will be featured in the new book I am working on is “risk management theater”. This is the name I coined for the commonly-encountered control apparatus, imposed in a top-down way, which makes life painful for the innocent but can be circumvented by the guilty (the name comes by analogy with security theater.) Risk management theater is the outcome of optimizing processes for the case that somebody will do something stupid or bad, because (to quote Bjarte Bogsnes talking about management), “there might be someone who who cannot be trusted. The strategy seems to be preventative control on everybody instead of damage control on those few.”

Unfortunately risk management theatre is everywhere in large organizations, and reflects the continuing dominance of the Theory X management paradigm. The alternative to the top-down control approach is what I have called adaptive risk management, informed by human-centred management theories (for example the work of Ohno, Deming, Drucker, Denning and Dweck) and the study of how complex systems behave, particularly when they drift into failure. Adaptive risk management is based on systems thinking, transparency, experimentation, and fast feedback loops.

Here are some examples of the differences between the two approaches.

It’s important to emphasize that there are circumstances in which the countermeasures on the right are appropriate. If your delivery and operational processes are chaotic and undisciplined, imposing controls can be an effective way to improve – so long as we understand they are a temporary countermeasure rather than an end in themselves, and provided they are applied with the consent of the people who must work within them.

Here are some differences between the two approaches in the field of IT:

Risk management theatre is not just painful and a barrier to the adoption of continuous delivery (and indeed to continuous improvement in general). It is actually dangerous, primarily because it creates a culture of fear and mistrust. As Bogsnes says, “if the entire management model reeks of mistrust and control mechanisms against unwanted behavior, the result might actually be more, not less, of what we try to prevent. The more people are treated as criminals, the more we risk that they will behave as such.”

This kind of organizational culture is a major factor whenever we see people who are scared of losing their jobs, or engage in activities designed to protect themselves in the case that something goes wrong, or attempt to make themselves indispensable through hoarding information.

I’m certainly not suggesting that controls, IT governance frameworks, and oversight are bad in and of themselves. Indeed, applied correctly, they are essential for effective risk management. ITIL for example allows for a lightweight change management process that is completely compatible with an adaptive approach to risk management. What’s decisive is how these framework are implemented. The way such frameworks are used and applied is determined by—and perpetuates—organizational culture.


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