A recent conjecture I’ve been working through relates to the nature of proximity in amplifying institutional existential risk. Two predominant dynamics appear to have significant responsibility in complicating the institutional ontological perception of risk: Politic and Procedure.
Politic: By nature, corporate programs become political. Politic predominates the corporate landscape, as executives compete for attention, promotion and provide for the acquisition and protection of scarce resources. While presumably amplified within the institution, politic is far from exclusive to the corporate entity. Elements of politics dominate our households, community sports leagues and are even visible in primitive form on a pre-school playground. Detached from its everyday reference, politic encompasses the culture of interface between our collective organizations, between human resources and information technology as well as between kindergarten and first graders on the playground. Politic is the libretto of the border.
Procedure: Defined processes, whether formal or ad hoc, are the song of the inner organization. Certain tonality, orchestration and structure is predictable within the construct of the procedure, akin to the slave songs of the plantation. Right and wrong notes are intuitively recognized as many a new departmental employee is quick to discover. Through the song of procedure, the volatility and uncertainty of the individual is synchronized to the motion of the group, pushing and pulling in close unison. Perception is collectivized through the group’s key signature and meter, creating pleasing melodies and harmonies. Dissonance becomes disruptive and is subsequently sought out and eliminated.
It would appear that both realms enhance a certain self-evidence within an organization. Both format the institutional template, creating a consistency and predictability that enhances the familiar. Management and workers construct and reinforce the Silo, the department’s perimeter which is built of political brick, protecting the inner song of procedure from the cacophony of the outside. Polytonality is most unwelcome.
However, such employment of Politic and Procedure in the realm of of the organization would likely lead to the increase in proximity to the self-evident, complicating and potentially damaging the capacity of the organization to accurately assess and forecast risk. Heidegger writes in The Essence of Truth that this very problem of of nearness impairs our capacity to assess truth:
How is it that the apparently self-evident turns out, upon closer examination, to be understood least? Answer: because it is too close to us and because we proceed in this way with everything close. We take care, for example, that this and that is in order, that we come here with pen and exercise book, and that our propositions, if possible, correspond with what we intend and talk about. We know that truth belongs in a certain way to our daily affairs, and we know quite naturally what this means. It lies so close to us that we have no distance from it, and therefore no possibility of having an overall view of it and comprehending it.
Heidegger’s observation represents a significant challenge to the methodology in which institutions attempt to manage risk. Upon examination of the existential failures of Long-Term Capital Management (LTCM), Amaranth and others, it is highly evident that this proximity to self-evidence destroyed the institution’s capacity to uncover risk. Indeed, in most organizations, the Song of the Auditor is a highly precise composition, in which the musicians are required to adhere specifically to the score, whether the song be a Sarbanes-Oxley, Payment Card Industry or CoBIT Information Technology assessment. While often creating a song of great elegance and harmonious beauty, it is a song of the familiar and self-evident. For LTCM, this libretto and song corresponded to the elegance of gaussian distributions and statistical certainties. Discordant models of leptokurtic possibilities sung by solo analysts were quickly escorted off stage. Indeed, with a board of directors that included quantitative geniuses Myron Scholes and Robert Merton, investors and financial markets were enthralled by a performance akin to the Three Tenors. That was, until the harsh and discordant antiphonal solo of the Third Parasite arrived, uninvited in proper Michel Serres form, destroying LTCM and nearly taking the global financial markets along with it.
Alternatives to the problem of self-evidence through politic and procedure appear to exist, and are likely to be found in polytonal forms. Autonomous risk organizations which seek no comfort in a predictable and consistent libretto and song are clearly more likely to uncover the existential risk. A successful risk program may be more akin to a performance of Charles Ives “Central Park in the Dark“, embracing rather than avoiding polytonality and dissonance, and subsequently recognizing signal and noise without the distortion of self-evident proximity. Additionally, further exploration needs to evaluate the nature of which truth is being assessed as it strongly appears that most formalized risk management practices evaluate “correspondence-to” truth and not “unhiddenness” truth.