Avoiding Inadvertent Risk Transfers in Complex Socio-Technical Systems
| dc.contributor.advisor | Gunawan, Indra | |
| dc.contributor.advisor | Nguyen, Nam | |
| dc.contributor.author | Luther, Benjamin Samuel | |
| dc.contributor.school | Adelaide Business School | |
| dc.date.issued | 2024 | |
| dc.description.abstract | This dissertation seeks to address the inadequacies of traditional Risk Management Frameworks in the context of complex systems, where the increasing intricacy of systems has obscured the observability of linear cause-and-effect relationships. Despite the best intentions of managers of complex systems, the attributes of complexity negative impact the effectiveness of risk management, leaving system users and third parties exposed to negative consequences. Literature review and research were used to ascertain the attributes of complexity that are negatively impacting the effectiveness of traditional Risk Management Frameworks. The compilation of knowledge in the literature review found that latency between inputs and outputs occludes deterministic relationships from the risk management process, and provides opportunity for a wider circle of users, extending to third parties, to be impacted by the consequences of risk realisation. But while latency stretches deterministic relationships, it is the attributes of dynamism and emergence in complex systems that breaks input-output relationships – to be non-deterministic. The non-deterministic attribute of contemporary complexity (featuring non-linear interactions and feedback loops) renders traditional Risk Management Frameworks inadequate for managing risk in complex systems. This leaves managers, users and third parties vulnerable, and potentially falsely assured by traditional Risk Management Frameworks. The flight test community's approach to risk management in complex systems had been observed to be remarkably effective, noting a few tragically, poignant exceptions. The intersection of advanced technology and human crew interaction in experimental flight test activity creates a complex socio-technical system, but it is the flight test response that presented the unique research opportunity. As a profession, flight testing involves operating aircraft in novel configurations to facilitate scientific investigation and engineering development of the underlying aircraft systems. Consequently, each test encounter presents a unique configuration, thereby introducing dynamism and emergence to the system. Flight test activity drives complexity into the system and the flight test community has learned to manage risk in that system with an effective Risk Management Framework. The success of this community presented a compelling opportunity to learn of the Risk Management Framework employed by flight test professionals, with the goal of identifying and understanding the attributes of their Risk Management Framework. That new knowledge could then be abstracted and generalised for application across other industries. An ethnographic research project was undertaken to learn of the flight test Risk Management Framework. Members of the profession were engaged through their professional societies, using survey, interview and focus groups. An abductive approach was adopted to recognise themes and gain insight into their risk management activity. Ultimately, the research enabled identification of the flight test Risk Management Framework and its attendant, underlying theory. The observational study was cross-sectional in nature and did not manipulate the activity being observed. The flight test activity being observed was constrained to that being conducted in English, within the prior 5 years, in organisations with an engineering management system, and with a hazard consequence that would be catastrophic to the risk manager. These constraints scoped the research, importantly placing the observer inside the system (as is practised in flight test) and exposing the risk manager to fatal consequences in the event of risk realisation. This constrained the risk management practices being considered to exclude resilience and robustness – a risk manager cannot be robust or resilient to a binary, realised consequence of death. This focused the research by decreasing the scope to only address the higher order risk management practices of flight test. The findings of the research were validated with the conduct of an empirically grounded analysis. Parallel research into the academic theory underpinning the flight test Risk Management Framework ascertained that there is no grand theory of risk. The international standard prescribes a general framework that is utilised by the flight test profession, but the standard is broad so as to be applicable across industries. The two-dimensional risk assessment matrix was found to be ubiquitous, though incorrectly applied as analysis instead of assessment. Investigation of the 2D risk assessment matrix finds its genesis in economic utility theory, and it uses Friedman’s probability theory to permit subjective assessment when quantitative data were not available. This was contrary to the finding of the flight test Risk Management Framework that otherwise rejected quantification of uncertainty. Although flight test adheres to the mandated corporate practice of including a 2D risk matrix in its risk management processes, the flight test team disregards the output of this tool for their flight test activities. Instead, they adopt risk mitigation practices that eschew statistical approaches, thereby avoiding false quantification. The flight test Risk Management Framework was an empirically observable validation of the alternative academic probability theory of Knight and Keynes who similarly reject the concept of subjective probability. For Knight and Keynes, a probability is either an empirical observation of rates of occurrence (a count), or a logical derivation of knowledge of failure rates with an attendant assumption of component failure precipitating system failure (a calculation). Flight test organisations were observed to retain access to qualitative risk management tools on account of their effectiveness against complex risk, without underlying knowledge of the academic theory. Flight test organisations mitigated consequence until it was acceptable, independent of the probability – a Precautionary approach. They also maintained qualitative measures of likelihood to convey nuance in the uncertainty and avoid communicating false knowledge of probability with numeric precision. An abstracted and generalised Risk Management Framework for use with complex systems, or systems that include complex elements, was designed using the learning obtained and validated through this research with the flight test community. While flight test organisations were observed to apply all their risk tools to every identified risk, ensuring an effective tool was among the set of tools in use, the research identified that the Cynefin ontological framework offered a means of categorising the intricacy level of the underlying system. By categorising the underlying system in which the risk was manifest, selection of a risk management tool cognisant of the impact of system attributes becomes possible. Selection of risk management tools that are effective increases the efficiency of risk management activity by avoiding nugatory efforts. The novel Risk Management Framework presented in this thesis includes a filtering step that uses a Cynefin lens to assign quantitative risk management tools prevalent in industrial safety, to high frequency, low consequence risks where empirical data is available. Similarly, the Cynefin lens assigns system safety tools to risk management where quantitative data about risks can be calculated, based upon reliability data. In addition to these two categories, the Cynefin lens is also uniquely sensitive to contemporary complexity where qualitative approaches are required because the non-deterministic nature of the system precludes quantitative knowledge. In contemporary complex systems, knowledge derived from any single observation is transient, or perishable, due to the inherent, system defining properties of emergence and dynamism. This precludes a statistically valid dataset for future use. So, like the flight test model, the novel, abstracted Risk Management Framework developed in this research utilises qualitative approaches to convey nuance in uncertainty. To address the question of avoiding inadvertent risk transfer in complex socio-technical systems, this study examined the flight test profession's unique Risk Management Framework to understand its effective methods for managing risk amidst complexity. By abstracting these principles, the framework was generalised for cross-disciplinary application in various industries. This generalised framework provides a means to address complex risks, thereby reducing the total quantum of risk. By addressing risk that is inadequately mitigated on account of complexity, the residual risk that might otherwise be transferred to unsuspecting user groups and third parties, is reduced. The outcomes of this research – the generalised framework, the identification of the absence of a grand theory of risk, and the recognition that quantitative probability approaches are ill-suited for complex systems – offer a pathway for enterprise managers implementing complex systems. This pathway aims to minimise the societal cost of risk realisation in complex systems. By explicitly identifying and addressing complex risks within parent organisations, these risks can be managed more effectively, thereby reducing the residual risk that might otherwise be unintentionally transferred to broader society. | |
| dc.description.dissertation | Thesis (Ph.D.) -- University of Adelaide, Adelaide Business School, 2024 | en |
| dc.identifier.uri | https://hdl.handle.net/2440/144557 | |
| dc.language.iso | en | |
| dc.provenance | This electronic version is made publicly available by the University of Adelaide in accordance with its open access policy for student theses. Copyright in this thesis remains with the author. This thesis may incorporate third party material which has been used by the author pursuant to Fair Dealing exceptions. If you are the owner of any included third party copyright material you wish to be removed from this electronic version, please complete the take down form located at: http://www.adelaide.edu.au/legals | en |
| dc.subject | risk management | |
| dc.subject | complex | |
| dc.subject | complicated | |
| dc.subject | socio-technical systems | |
| dc.title | Avoiding Inadvertent Risk Transfers in Complex Socio-Technical Systems | |
| dc.type | Thesis | en |
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