Tuesday, September 1, 2009

Knowledge-worker roles in the 21st century - 2/2

I am going to now talk about the second kind of job, that is going to become increasingly attractive for knowledge workers. In the first type of job, I talked about the advances in computing and communication capabilities and technology that make it extremely attractive for jobs that had been performed hitherto by humans to now be transferred to machines. Does this mean that we are all headed into a world depicted in the Matrix or in the Terminator movies?

I think not. As these jobs get outsourced, I anticipate a blowback where society discovers that there are certain types of jobs that cannot be handled by computers at all. These are tasks where highly interrelated decisions need to be made, and where the decisions themselves have second-, third- and fourth-order implications. Also, the situations are such that these implications cannot be 'hard-coded' but keep evolving at a rate that make it necessary for the decision maker to not only follow rules but also exercise judgment. These are places where a 'human touch' is required even in a knowledge role. (I say 'even' because knowledge roles by definition should be easier to codify and outsource to computers.)

One such area that is certainly a judgment based role is risk management. Risk management is anticipating and mitigating different ways in which downside loss can impact a system. Risks can be of two types. One, there are standard 'known' risks whose frequency, pattern of occurence and downside loss impact are comparatively well-known and therefore easier to plan for and mitigate. The second are the unknown risks whose occurency and intensity cannot be predicted. Now any system needs to be set up (if it wants to survive for the long term, that is) to handle both these types of risks. But as you make the system more mechanized to handle the first type of known and predictable risks, it has lesser ability and flexibility to handle the second 'unknown' type of risk.

This is where the role of an experienced risk manager comes in. A risk manager typically has a fair amount of experience in his space. Additionally, he has the ability to maintain mental models of systems in his head which have multiple interactions and whose impacts span multiple time periods. The role of the risk manager is then to devise a system that works equally effectively against both known and unknown risks. The system needs to be such that standard breakdowns are handled without intervention. At the same time, a dashboard of metrics are created about the system which give visibility into the fundamental relationships underlying the system. And when the metrics point to the underlying fundamentals being stretched to breaking point, that's the point at which the occurence of the unexpected risks becomes imminent. The risk manager then steers the system away from being impacted by the downside implications that can result.

My role in my industry is a risk management role, and the role has given me the chance to think deeply about risk and failure modes. And it certainly seems clear to me that there will always be room for human judgment and skills in this domain.

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