Coming as it does amid a tenacious pandemic, increasingly ferocious climate change and the heightened risk of World War III following Russia’s invasion of Ukraine, Richard Alfred’s latest book could not be timelier.

Alfred, who lives in southern coastal Maine, is a professor emeritus at the University of Michigan where he taught and published on leadership and organization effectiveness.

As its subtitle suggests, “Catastrophic Risk: Business Strategy for Managing Turbulence in a World at Risk” focuses on business, but Alfred’s well-researched and holistic approach to risk management is equally as important for leaders in government, community organizations and nonprofits.

Alfred’s overriding interests are two-fold. First, identifying why people and institutions ignore, or are slow to prepare for, obvious risk. Second, exploring avenues to improve risk awareness and response. In doing so, he considers psychological and organizational theory in the context of catastrophic risk the planet faces, observing, for instance, “Extreme risk brings an element of uncertainty that makes comprehension and response difficult… Effective response depends, in large part, on getting people to understand the uncertainty that accompanies risk and to mobilize in response to it.”

Alfred begins by defining catastrophic risk as global in scope and carrying with it the potential to extinguish most human life on the planet. He then names five primary categories of these risks: climate change, nuclear warfare, social inequality, rogue technology and outbreak of disease.

Many catastrophes come “as a shock but not a surprise.” So why, Alfred asks, “do some with full access to information respond proactively to risk while others waver or default?” What, in other words, causes denial or inaction in the fact of catastrophic risk?

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Here Alfred explores the dynamics of human behavior that inhibit risk identification and proactive response. Among these barriers are social instability and the breakdown of norms that hold societies together, a common feature of modern societies “that predisposes them toward mismanagement of risk.”

In addition, polarization, fueled in part by social media, has resulted in groups seeking out information that confirms their existing beliefs — what is known as confirmation bias — rather than considering conflicting information. Another factor is information overload; the vast amount of information available makes it difficult for people to differentiate between important and irrelevant information.

When confronted with information contrary to their held beliefs, some become naysayers who ignore scientific data, claiming that there is insufficient data to reach a conclusion or arguing that (in the case of climate, for example) the changes are cyclical and normal. Others develop a form of psychological numbing that over time renders them insensitive to the risk of high casualty events. Inertia is an ever-present impediment.

In a brief but important part of the book, Alfred suggests that it is incumbent upon leaders to “understand and act” on the factors causing immobility so they can “develop robust answers” to these impediments to action. “The human side of risk has received far too little attention in complex organizations,” he laments.

Alfred considers the COVID-19 pandemic as a case study and notes that world leaders were unprepared for the pandemic because of a false sense of security, perceptions that publicized risks of the swine flu, SARS and Ebola outbreaks were overstated, and political pressure for a short-term focus.

“Governments are unprepared because of a lack of imagination, a failure to plan and invest, and a lapse in public will.” All of these illustrate the role of behavioral factors at the individual and organizational level.

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Climate change, Alfred observes, “is inextricably linked to business and will significantly impact business performance moving forward.” In response, businesses worldwide are developing plans to adapt to and mitigate climate change. The response is necessary because of evolving notions of the role of business in society. Alfred cites a 2019 Business Roundtable publication that acknowledged a role for business beyond profit. “Each of our stakeholders is essential,” it stated — a stunning departure from the long-held notion that the sole mission of business was profit.

Alfred calls for moving beyond corporate social responsibility to community wellbeing.

“The need to think differently about business in a world at risk is not a matter of question, it is an imperative.”

He envisions a more cooperative business model inspired as much by collaboration as cooperation, and including joint ventures, licensing and cooperative research agreements.

To effectively confront global catastrophic risk, business must consider the human, political and psychological factors in risk and then, Alfred argues, transform to an extent commensurate with the risk. This is sage advice for business, governments and nonprofit organizations as well.

Dave Canarie is an attorney and adjunct faculty member at USM.


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