Understanding Risk : Complexities and Uncertainties

ESG Investments require ongoing risk assessment, management and monitoring. But it is really difficult to understand risk. The fact is our working world is not getting any simpler, only more and more complex.

For most, this increased working complexity can be felt on an almost daily basis. Continually evolving technologies, product trends, consumer behaviors, data sets and stakeholder relationships all contribute to a working world which is growing ever more dynamic, unpredictable and systemically co-dependent.

Building on this observation, basic complexity theory teaches us that as systemic complexity increases, environmental rationality and predictability decreases - so much so, that at the highest levels of complexity there is wild environmental disorder (chaos). In turn, modern day risk professionals are now faced with a particularly ominous challenge; how to effectively control those disruptive phenomena (risks) known to emerge from within highly inter-connected operating systems, experiencing ever increasing frequencies of change, balancing on the edge of chaos.

Get the fundamental question on “What qualifies as (scientifically) valid risk management within highly complex, operating environments?” answered.