Growing societal importance
Both the financial meltdown and oil spill crises have shown that the challenges of risk management extend far beyond their meaning for any one firm. Our increasingly interconnected society faces risks on countless political, technical, environmental, demographic, military and cultural fronts. The huge disasters of the last few years, whether one sees them as criminal or not, have clearly changed government and societal tolerance toward both business and technological risk, and in many ways businesses have only themselves to blame. While there will always be business and industrial accidents, it’s hard to avoid the conclusion that the common denominator of both disasters was irresponsible levels of human greed.
Looking ahead, the big question is whether today’s understandable societal anger and distrust will prove transformative or temporary.
America, in particular, has historically had a willingness to accept large business and technology risks. Recent events have clearly diminished, but (hopefully) not permanently damaged this spirit. In contrast, China and other emerging nations have largely grown in confidence and ambition over the last few years. Whether these changes are temporary or permanent is now a matter of much intellectual debate. While history nearly always runs in cycles, the length of these cycles can be years, decades, or even centuries.
For better or for worse, the modern (at least Western) world has bet its future on the belief that a combination of moderately regulated private enterprise and major technological progress is the best way to both address ever-changing societal challenges and pursue a more prosperous future for all. Given the dizzying array of technological advances that are all but certain to come, it is important that confidence in this philosophy be successfully restored. This will require sustained but responsible risk taking, a balance that can only be achieved through a combination of top-down risk governance and the bottom-up operational culture of the firm. While issues of values, ethics and integrity will always be paramount, information technology will play an increasingly important role.