Traditional risk management is failing in the age of the interconnected enterprise. Understanding the real risk exposure of projects requires a more intelligent approach
Project performance relies heavily on a company’s ability to manage a complex web of dependencies, that evolve across time, including supply chains, teams and resources. These dependencies form networks that determine the fragility of a project to large-scale, systemic failures, such as those caused by a global pandemic. When projects are as complex and connected as they are today, traditional risk management falls short in response to events like the coronavirus crisis.
Risk is commonly defined as the probability of a harmful event taking place, multiplied by its impact. But in the context of modern projects, this equation no longer adds up. The COVID-19 pandemic was seen by many as a low-probability and high-impact risk, often called a “black swan” event, but that is not the case. Applying traditional risk procedures and tools will lead organisations to ignore the complexity and interconnectivity of doing business in the digital world, perpetuating a false sense of confidence and deepening their risk exposure.
Companies that don’t embrace the technologies which enable them to alleviate emerging risks are going to be left behind
“The COVID-19 pandemic is very similar to a systemic financial crisis”, says Dr Christos Ellinas, a world leader in redefining project management, co-founder and chief technology officer at Nodes & Links. “Both events show that our economy is composed of networks coupled together and both are wrongly interpreted as black swans. Many experts predicted for a long time that a pandemic was bound to happen.
“Ultimately, it doesn’t really matter whether it’s low probability, high impact or any other combination of the two. What actually matters is the fragility of the overall system. Nothing is too big to fail, but it can be too connected to fail. The challenges we are now facing with COVID-19 are the result of our society and economy being deeply connected.”
There is another way of understanding risk, shifting the focus from probabilities to connectivity. Connectivity is a quantifiable and measurable aspect that can help companies leverage risk and capitalise on opportunity. Nodes & Links brings this perspective into a core aspect of almost every organisation: projects. By understanding the implications and consequent exposure that projects have against risk, project experts can optimise decision-making while delivering tactical workload savings and cost efficiencies.
Nodes & Links does this through Aegis, its cloud-based intelligent platform. By incorporating the effect of networks that underpin the delivery of projects, Aegis empowers its users to improve the outcomes of capital and infrastructure projects across all sectors.
“Conquering project complexity is one of our core missions,” says Dr. Ellinas. “Aegis allows project experts to better understand what the data tells them, and then test different scenarios to assess the overall exposure of the project and the likelihood of it being delivered on time.”
The modularity of the technology has allowed Nodes & Links to quickly help businesses quickly deal with COVID-specific scenarios. The novelty of the approach has seen the results reach all parliamentarians, ministers and even No 10 after featuring in a report by the Parliamentary Internet, Communications and Technology Forum.
“Tackling COVID-19 is near impossible with a traditional risk perspective,” Dr. Ellinas explains. “But approaching it from the perspective of fragility means we can deal with risk and achieve resilience in a simpler, more effective way.”
By uncovering how risk percolates across entire organisations through the lens of project delivery, Nodes & Links is opening up a new era of data-driven, corporate governance and enabling new economic opportunities. Its platform combines high-fidelity raw project data with tagging by project experts to provide a better understanding of where risk lies, unlocking innovative products such as micro-insurance based on the likelihood of certain tasks being delayed.
“We live in an interconnected era and as we see more digitalisation, organisations need to be agile in how they adopt, utilise and capture value from digital tools,” Dr. Ellinas concludes. “Unless we provide the formal instruments to deal with risk in a way that is appropriate to this era, it will come back to bite us again and again. Companies that don’t embrace the technologies which enable them to alleviate emerging risks are going to be left behind.”
For more information please visit www.nodeslinks.com