Understanding and Managing Complexity Risk Harvard Case Solution & Analysis

In the past, companies have tried to manage risk by focusing on potential threats outside the organization: competitors, changes in the strategic landscape, natural disasters and geopolitical events. They are generally less adept at identifying internal vulnerabilities that permeate organizations and other human systems developed. Indeed, as companies increase the complexity of their systems, they often do not pay enough attention to the introduction and spread of gaps and challenges. It is important to remember that the accidental failure increases as the number of combinations of things that can go wrong is growing, and the potential for malicious actions also goes up. New applications based on legacy systems, and errors creep in between the lines of code. The merger of the two companies and weak shoots between organizational boundaries. Build a Byzantine corporate structures and processes, and unclear pockets created where bad behavior can hide. Furthermore, the enormous complexity of large systems, such as communication networks means that even tiny failures can cascade into a catastrophic event. In fact, catastrophic events almost certainly the case in many complex systems, as well as large earthquakes happen. Thus, not having perfect foresight, as you can open business and prevent fatal flaws hidden in their organizations? There are three additional strategies: (1) Risk assessment to make more informed decisions, such as the purchase of an insurance policy to cover the risk, (2) vulnerabilities and fix them before catastrophic events occur, and (3) the design of the weak for resistance. These ideas have been around for years, but scientists have recently had to invent them in the context of extremely complex, interconnected, cascade-prone systems. "Hide
by Eric Bonabeau Source: MIT Sloan Management Review 9 pages. Publication Date: July 1, 2007. Prod. #: SMR255-PDF-ENG

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