June 10, 2008
Risk, Knowledge and Risk Knowledge Management Systems
How can we discover Knowledge Management (KM) and Enterprise Risk Management (ERM) relationships?
The search for these relationships can be based on the identification of the way people, processes and technology are associated with the operation of the organization.
First, people are agents in KM and ERM. KM is embedded in culture and individuals, and organizational knowledge sharing is required to operate the business. Moreover, knowledge includes a state of mind with cognitive elements -tacit and explicit- that affects the involvement of people in processes and their individual memory.
In the case of ERM, we may find that operational risks occur because of human errors. This means that probably the selection of right people behind processes and their knowledge can help to mitigate risks. Some authors point out that more knowledge can mean lower risk and that people will be coordinated based on the processes and organizational structure.
Second, KM and ERM disciplines have their own processes. However, process management has common elements applicable to both disciplines, such as the way the organization designs processes, measures results, defines roles and responsibilities and connects actions with strategy. Knowledge can be considered as a process itself (for some authors this is the case) that needs, the same as the KM processes, a structure for its management based on the understanding of business processes and the technology that supports them.
Each process has associated risks related to human actions and choice of resources. These risks are studied by the ERM processes. This means that ERM has to analyze people’s actions, operations and knowledge in order to mitigate risks of the business processes.
Third, technology supports the processes for KM and ERM. KM processes include the “how” to access information. This access to information requires the creation of information systems. These systems can evolve to knowledge management systems that support the company’s results providing access to information, knowledge development, technology and organizational structure support. One of the main components of the information is the one of risk management. This means having an information system that evolves to a knowledge management system that support risk management across the organization.
In summary, the search for relationships between KM and ERM can be based on people, processes and technology in order to support the organization. The evidence of the relationships has to be discovered based on research to understand the connections and ways to complement the two disciplines.
Research space
I want to share one of de Bono’s reflections about teaching thinking that is applicable to our development of models, interpretation of results and capacity to share the meaning in order to make decisions. In the traditional approach, says de Bono, three components are the bases of errors in thinking: fluency (referral material), freedom from error (no apparent error and taken as correct) and logical consistency. De Bono says that we have concentrated a lot on the logic consistency that is not the main cause of thinking errors. He proposes: partialism, time scale, egocentricity, arrogance and conceit, initial judgement, adversarial thinking, ego involvement, magnitude of error and extremes.
This is something to think about. I have found a lot of these kinds of errors and in risk management it is very important to overcome the barriers that these errors create in order to mitigate the “risk of errors” in risk management.
Your model and my model!!!
Now, the model that I have is based on the assumption that risk, concepts and knowledge are the pillars of a managerial mind. See http://iqanalytics.com/index.php?option=com_content&task=blogsection&id=21&Itemid=78
The assumption comes from my own experience where I have found a limited level of conceptualization in the practice of administration of companies. In addition, a reduced connection between knowledge and risk introduces many errors with people, operations and strategy. People use different languages within the organization; there are many decisions in the administration that are not based on risk. Risk management in many cases has a reduced knowledge sharing and lack of communication that limits the improvement of the organization’s performance.
Mathematical Circle:
One of the most important contributions of the Bourbaki group was the capacity to work together as a community of practice with the objective of formalizing mathematics. Communities of practice are techniques used in Knowledge Management; the purpose is to connect people with a specific objective that voluntarily want to share knowledge. In risk management, communities of practice can be very useful to avoid reinventing the wheel, to learn from experiences and to create an environment to reduce the “risks” of risk management.
Thank you
Eduardo Rodriguez
Principal
eduardo.rodriguez@iqanalytics.com
www.iqanalytics.com
Posted by edrota at 11:55 PM
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