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Ethos Issue 7, Jan 2010

Enterprise Risk Management:
Strengthening Singapore’s Advantage

Ang Hak Seng

For each level of uncertainty, there are tools available to manage vulnerabilities (the downside of risks) and seek opportunities (the upside of risks). Clearly, it is important to first appreciate at which level of uncertainty an identified risk resides, since to underestimate a risk is to potentially be exposed to its unmitigated effects. For instance, an investor who relied solely on historic market data would probably have had a rude shock when the financial crisis struck.

 
 
 

Sensing in the Singapore Police Force

FIGURE 4. EARLY WARNING SYSTEM

TRIPWIRES
The information technology revolution means that management is inundated with information and news. To ensure proper management of the vast amount of information, prior hypotheses must be made, which will also specify triggers to alert management to major systemic issues ahead of time.

BOTTOM-UP SENSORS
In the Singapore Police Force (SPF), a Learning Organisation culture facilitates the exchange of ideas and surfacing of ground issues. Internally, the Leadership Group (which includes ground commanders) gathers regularly to exchange ideas, insights and new risks in a collegial atmosphere. A "near miss" mechanism allows ground officers to surface incidents that could have occurred, but were narrowly avoided. Adequate channels to reflect ground realities to senior management ensure that policies made are fully cognisant of the ground situation. For example, during the recently concluded APEC operations, SPF deployed morale sensing teams to obtain important ground realities, resulting in important adjustments to deployment plans.

ELIMINATE FILTERS
To facilitate a healthy culture of empowerment, a "Management of Mistakes" framework was introduced to promote an environment in which it is "safe to talk" and "safe to take risk". The framework provides a safety net for officers who have committed honest, non-malicious mistakes.

MULTIPLE PERSPECTIVES
Externally, stakeholders play an ever larger role in the decision-making process of any organisation. In SPF’s context, interaction with the community over a variety of platforms gives rise to new risks to be placed on the radar. For example, the National Crime Prevention Council has traditionally been a valuable sensing source. Next year, a Citizen’s Academy will be established to further engage influential thought-leaders in the community. With the gradual erosion of transnational borders, events happening in another part of the world may have a huge impact on local outcomes. It is hence vital for any organisation to gain multiple perspectives by plugging itself into an international network. The Risk Assessment Horizon Scanning framework, for instance, can be used to this end.

~ Ang Hak Seng

 
     

Managing Vulnerabilities
At the first level of predictability ("Known Knowns"), one has high confidence that the future is known and looks very much like the past. Therefore, strategic planning simply involves allocating resources based on extrapolating from past events. Such environments are now very rare. Even when it occurs, it can be dealt with using Specific Operation Plans (SOPs). Since scenarios have been pre-specified, specific contingency plans may be put in place, with actions specified in each scenario.

At Level 2 ("Known Unknowns"), plausible scenarios are presumed to be known, so resources may be applied directly to lower the risk at source. For major contingencies, scenarios can be plentiful—the key to managing such a broad range of possibilities is not to create individual response plans, but to develop deep pockets of capabilities. When necessary, these capabilities can be applied to manage
any fallout.

 

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