I have devised this concept because it comes as close as anything to the notion of aggregating intuition, experience and good judgment. In this era of Big Data, with apps that create short cuts for rigor and algorithmic risk modeling that fools even mathematicians, we possess a thinkers’ paradox. It’s well animated, in fact, in Jessie Eisinger’s DealBook article, “Uncovering the Human Factor in Risk Management.” A couple of points strike the fundamental of experiential intelligence:
“Instead of fixating on models, risk managers need to develop what spies call ‘humit’ – human intelligence from flesh and blood sources.
…regulators should encourage firms when they reach different conclusions on what is risky and what is safe. That creates a diverse ecosystem, resilient to any one pestilence.”
In a world defined by human frailty, it is fundamentally illogical not to account for human behavior in managing risks – of any kind. We will never see the day when heart surgery is completely automated or that an effective app exists for good parenting. Just as the best total quality processes weave in constant improvements and diverse points of view, so too must risk management – both quantitatively and qualitatively. Experiential intelligence enabled U.S. Airways* pilot Sully Sullenberger to land his plane on the Hudson. Autopilot didn’t do it. Experiential intelligence enabled Navy Seals to find and execute Osama bin Laden, not a drone. And experiential intelligence is the grist that enables millions of good decisions every day for which no formula will ever exist.
As long as risk management and strategy remain separate nations, it’s very unlikely that experiential intelligence will be engaged effectively. By definition, strategy development is a creative process that enlists different mindsets and disciplinary contributions. The transcendent value that resides in a well-conceived strategy is the “forging process” of a common goal. Too frequently, the notion of risk gets treated as a “buzz kill” in the momentum of strategy, and that’s a tragically flawed conception.
But by embedding risk into strategy, real options and opportunities are charted and the “muscle memory” that is the DNA of experiential intelligence activates. It’s precisely this forging process that builds resiliency and a risk culture that views risk as opportunity, not simply danger.
Harlan Loeb is the global chair of the Crisis & Risk practice at Edelman.
Image by _DJ_.