Using Futures Studies to manage and mitigate risk
Every decision and strategic initiative that a business undertakes is a leap forward into the unknown. The variables that one would need to have intimate knowledge of in order to accurately predict the outcome of a proposed action is beyond comprehension.
But let’s, for a moment, imagine a world in which every business decision and undertaking involved zero risk, with the outcome known beforehand. On the surface, this might seem appealing – after all, who doesn’t want to know that entering a new market or changing your business strategy is going to be worth it before committing any time and resources?
The problem is that this would result in a heavily determined business environment. For any possible action, there would be a clearly visible optimal path for any decision maker to take; to do otherwise would be ludicrous. And with that, the human element of business decision making would swiftly become obsolete.
Thankfully (or unfortunately, depending on your stance on human obsolescence), exactly how the future will unfold remains perpetually enshrouded in mystery. But this is by no means reason to resign oneself to a helpless reactive nihilism. If anything, the unknowable future should inspire action, as it is effectively a realm of pure possibility. As Professor André Roux, Head of Futures Studies at USB, reminds us: The future is the only space in time we can influence.
For a business, the question of preparing for – and attempting to control – the future appears most frequently in the context of risk analysis and risk management. Let’s take a closer look at these disciplines, and how Futures Studies can equip you with the skills and tools you need to mitigate and manage risk effectively in your professional life.
A brief history of risk analysis and management
For millennia, humans (and animals) have undoubtedly understood the nature of taking risks and preparing for the future. After all, risk aversion is widely considered to be one of the most important evolutionary adaptations, guaranteeing greater survival rates in potentially dire situations.
A common theory about why we abandoned our hunter-gatherer lifestyles in favour of a sedentary agricultural existence is that the latter involved far less risk. For instance, without stockpiles of food, a foraging human being could not guarantee that her whole tribe would survive an unusually harsh winter.
But despite this natural tendency towards risk aversion, risk management and analysis did not take formal root in the worlds of business and industry until the 20th century. This was largely a result of the fledgling insurance industry, which was in turn a response to newly industrialised (and uniquely dangerous) working environments.
In the 1930s, German industrial researcher Karl Daeves pioneered an objective, statistical approach to understanding risk the workplace, in the form of his Großzahlforschung (literally translated as “large number research”). But it was only in the mid-1970s, spurred by the critically received Rasmussen Reactor Safety Study in the United States, that risk management became standard practice in organisational environments.
The development of computing technology has since dramatically increased our analytical capabilities, making it possible calculate statistical risk and probability with ever-greater precision.
How Futures Studies can prepare you for long-term success
The academic discipline of Futures Studies builds on this history of risk analysis through the application of various analytical tools and frameworks, equipping students with the ability to make strategically sound long-term decisions. This is especially valuable in the context of business and development in Africa, as much as forward planning is needed to maximise the positive impact of enterprise and raise overall quality of life.
Central to Futures Studies is the previously mentioned understanding of time as fundamentally flexible and shapeable by human action. As Kees van Heijden describes in his widely acclaimed book, The Sixth Sense: Accelerating Organizational Learning with Scenarios, “The complex nature of change means that predicting events is impossible, and is quite likely to be dangerous, as it implies inflexibility and a need to become locked into one specific prophecy… Of much greater value is the ability to recognize ‘dots on the horizon’ – the signs of change that inevitably affect every organisation – and to understand their significance and how the organization should adapt.”
If you’re interested in developing a holistic understanding of the forces shaping our future and acquiring the skills and tools you need to play an active role in creating that future, consider enrolling in a Futures Studies programme (with options to do a Postgraduate Diploma in Futures Studies, MPhil in Futures Studies or a PhD in Futures Studies) at the University of Stellenbosch Business School. It’s a great way to position your future self as an agent of positive change in South Africa and beyond.
We can create a preferred future if we want to, if we conspire to do so, and if we act with purposefulness, understanding and insight.
– Professor André Roux, Head of Futures Studies at USB