People use the word ‘complex’ and ‘complicated’ interchangeably in many cases, and so does in a discussion of risk management. Do they have the same meaning or different ones? If they have different meanings, under which circumstances should we and would use ‘complex risk’ and/or ‘complicated risk.’?
Let us see what the dictionary says about the respective word. According to Cambridge Dictionary, complexity has many parts and is difficult to understand or find an answer to. Whereas the word ‘complicated’ refers to a situation that is not easy to deal with or understand. Although the descriptions of both sound similar as they intersect one another, they bring different profound meanings. Complexity is the phenomenon itself, while complicated is the elements of the mental standing of a person in dealing with such a phenomenon.
From a risk management perspective, we could say that complexity refers to the situation or the risk object itself, whereas complicated refers to the subject supposed to deal with such a risk object. In this regard, complexity brings some challenges to be sorted out, and therefore if we talk about complexity in the risk management universe, we call it complex risk. For example, cyber risks due to the rising of new technology may cause higher interconnectedness risk among concerned parties (as a result of much wider and numerous nodes). As it is a complex issue, hence we refer to it as ‘complexity.’
On the other hand, Complicated reflects the mental standing of the person dealing with a certain risk phenomenon. In this regard, the person tends to judge that the phenomenon is ‘complicated,’ either real or non-complex. Such a mental standing could happen because there is a gap between the capacity and capability of the person and the level of the phenomena they are dealing with. Unfortunately, such a gap may lead the person’s lens to be slipped into ‘complicated risk syndrome’ (CRS) if there are no cautious efforts to avoid otherwise. Moreover, since this syndrome is contagious, it could be widespread throughout the organization and may create an unhealthy risk culture later.
What actually can go wrong if this particular situation happens?
If such a situation happens, there is a possibility that people in the organization will be easily trapped to see all risks as ‘downside risks’ and therefore, they will allocate all the energy to reduce the likelihood of risk events and mitigate the impact to protect the value of the organization. If that happens, it will become a blind spot as the organization is not stimulated to explore their upside risk nor preparedness. As a result, their attention is blinded by downside risk. No or little energy will be allocated to exploit or capitalize upside risk to create value for the organization sustainably.
What should be done to avoid ‘complicated syndrome’?
Build healthy and conducive risk culture throughout the organization by having a higher risk management maturity level. Along with that initiative, develop risk management competency at the high and medium levels of the organization up to its critical mass. As such, they would be encouraged to see beyond their current horizon and do not fall into the trap of seeing complexity as a threat or downside risk. Instead, they could see complexity as an opportunity and then drive them up as upside-risk challenges.
The way onward?
Entering a new frontier Post Covid-19 Pandemic, we have seen many phenomena characterized by the origin of VUCA (Volatility, Uncertainty, Complexity, and Ambiguity). As such, the existence of complicated syndrome would hinder us from having a clear vision beyond boundaries and existing horizon lines, barely understanding and clarity over the VUCA.
On the way onward, there is a suggested approach to overcome such an originating VUCA, which is also called VUCA (Vision, Understanding, Clarity, and Agility). The VUCA (Vision, Understanding, Clarity, and Agility) can be established, developed, and institutionalized if no complicated syndrome is left throughout the organization. Therefore, let us begin to switch our mental standing whenever we face certain risk events. Risk due to ‘complexity’ is fine as we can always sort it out. Still, risk due to ‘’complicated’’ should not be tolerated as it will hinder us from progressing and capitalizing on opportunities that come with uncertainties.
I hope this article is helpful for risk management practitioners.
Dr. Antonius Alijoyo
Founder of Center for Risk Management and Sustainability Indonesia
Artikel ini juga diterbitkan dan di publikasi pada https://crmsindonesia.org/publications/dealing-with-complex-risk-or-complicated-risk/