How is counterfactual thinking integrated in organizational risk and resilience practices?

Abstract

Managing risk from natural hazards and other types of critical risks is fundamental to the viability, sustainability, and resilience of organizations of all types and sizes. It is, crucially, an important part of demonstrating their purpose and commitment to society and the broader environment, which incorporates what they do to help tackle climate change. Counterfactual thought is the process of reimagining the past, for example, for a particular event that has occurred, as being different than what actually transpired. In this study, we investigate how this process and mindset of counterfactual thinking can have specific value in helping people in organizations to have a more robust way of analyzing and managing risk. The role and potential impact of counterfactual-based practices on risk mitigation and management, and an increased focus on purposeful resilience in a business context, has not previously been widely studied. We have conducted 10 semi-structured interviews with people in senior positions in various organizations, global contexts, scales, covering a range of industries and sectors including construction and property, engineering, mining, nonprofit, and consulting. Through these interviews we identify: (1) existing challenges of current risk management systems; (2) types of risks of concern in the organizations interviewed; (3) the current and potential use of counterfactual practices in these organizations; and (4) the perceived value of counterfactual practices within the business setting for risk mitigation and resilience. We share best practices that emerged from the study, especially the role of leadership, diversity, and inclusion as a necessary foundation for successful implementation of counterfactual risk practices. The findings from this project can be used to inform businesses interested in adopting emerging downward counterfactual risk and resilience practices to improve their preparedness to manage critical and evolving risks.