Know What You Don't Know

The earlier a risk is identified, the less costly it is to address. Starting with this common-sense assertion, Michael A. Roberto proceeds to demonstrate the challenges of spotting the tell-tale signs early on in uncertain, fast-shifting environments. Using detailed examples, he studies why problems tend to become apparent too late and identifies the drivers that can keep managers from being caught by surprise. The first chapter is very enlightening on early risk detection issues, but especially on the many biases that tend to blind us. The following chapters then successively cover seven key ways to learn to detect risk more effectively, with the most interesting being chapters 2 to 5. In particular, chapter 2 warns against the biases caused by our immediate environmental filters, and provides examples of how to engage directly with the potential sources of risk, e.g., customers, employees, suppliers, etc. Chapter 3 underlines why it is important to use direct observation to find out what is happening, rather than simply interviewing people on the ground, much like ethnologists. Chapters 4 and 5, which explain how to capitalize on weak signals and make the link between different indicators, also merit a close look.