I’m prompted to write this because of an article I was reading earlier. The following paragraph jumped out at me like it was an affront to all rational thinking. This was written by Sir Walter Layton, Economist and Editor of ‘The Economist’ who wrote in 1933.
“This is due to the now almost universal recognition of the fact that the economic crisis cannot be solved, and can hardly even be palliated, by the action of individual governments. It has been abundantly proved that independent action, unless very wisely conceived and studied in its reaction upon other countries, is likely to deepen the general depression, and that any benefits which accrue to an individual nation are at best only relative. In short, there has rarely been a clearer case of a vicious circle, or one on a larger scale.”
April 1933 – nearly 89 years ago and this thinking still exists today. A paradigm this old cannot be abandoned until a new paradigm emerges to replace it.
During the COVID crisis, like many of you, I’ve had time to reflect on the past 30+ years of managing risk, teaching risk management, and advising clients on risk.
The willingness to have a paradigm shift allows individuals and other stakeholders to organize and understand crucial information within the parameters of reality.
Thinking of our own or anyone else’s paradigms is just not something that occurs naturally. Thomas Kuhn famously published his theories of paradigms shifts in 1962.
It is only because of working in risk management all these years, that I can apply the knowledge of paradigm shifts for greater effect. The experience creates understanding of the path that a paradigm shift takes after every crisis the world experiences.
Consider just a few of the economic, financial and health crises in the past 30 years in North America alone:
- 1987 – Black Monday,
- 2001 – Dot.com bubble,
- 2002 – SARS,
- 2008 – Financial Crisis,
- 2018 – Zika Virus
All these events have impacted how and when we decide to move forward and live with the resulting paradigm shift. My interpretation of how the shift in paradigms occurs looks like this:
Stage 1 – we live in the ‘Normal’ – conditions as they are, as we are accustomed to
Stage 2 – we drift toward an event (emerging risk) – uncertainty is heightened
Stage 3 – we are in crisis (the event happens) disorder – chaos – ineffective decisions
Stage 4 – we are in turmoil (mindsets shift) reflection – critical thinking – problem solving
Stage 5 – a paradigm shift (new patterns in decision-making) new clarity – new reality – new risks
Stage 6 and the next Stage 1 – the ‘New’ Normal (for as long as it lasts) – adopt new paradigms
Following this thinking . . .
It is my belief that we are in for a significant shift in both decision and risk paradigms. We have the tools and the technology to decipher and reconstruct the information necessary to better identify emerging risks; not to ponder the problems and blue-sky risks that occupy current risk identification and reporting models.
The shift in decision and risk paradigms will set businesses on a new path toward becoming risk-aware on a whole new level. The awareness will be born out of the need for more systematic critical thinking. (More on this in a later article)
At the time of writing, we are still in crisis mode (Stage 3) – after all, it is the COVID-19 pandemic (crisis). I expect in the coming weeks, we will likely begin to face the turmoil that will cause us to assess our own mindset around the many questions swirling around in the mind and in the media. In such times, I generally lean to a positive frame of thinking and believe that humanity will thrive.
As scientists, researchers, and business professionals search for the Aha! Moments that give us new understanding in a different way, we will discover new decision and risk models.
We are in the ideal position to exploit this generative and revolutionary time except unless we are to repeat the ill-fated decisions of the past.
