science

Risk intelligence

Risk intelligence is a science topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand Risk intelligence rather than just read about it. In short: Risk intelligence is a concept that generally means "beyond risk management", though it has been used in different ways by different writers. The term is being used more frequently by business strategists when discussing integrative business processes related to governance, risk, and compliance.

Key takeaways

Risk intelligence belongs to science; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect Risk intelligence to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of Risk intelligence from memory before moving on to harder problems.

Reference excerpt

Risk intelligence is a concept that generally means "beyond risk management", though it has been used in different ways by different writers. The term is being used more frequently by business strategists when discussing integrative business processes related to governance, risk, and compliance.

Definitions The first non-definitive usage of the phrase "risk intelligence" appears in the 1980s and aligns to the definition of intelligence as being information from an enemy (for example, regarding credit risk.) The topic of balancing risk and innovation using information and the cognitive processes involved also appears at this time. Recent usage is more aligned to intelligence as understanding and problem solving. The US business writer David Apgar defines it as the capacity to learn about risk from experience. Deloitte Risk Advisory partner (since retired) Stephen Wagner, along with former Deloitte partner and current management consultant and risk advisor Rick Funston, defined risk intelligence as a dynamic approach to protect and create value amid uncertainty. It is an enterprise wide process integrating people, processes (systems), and tools to increase information available to decision makers for improved decision making. The UK philosopher and psychologist Dylan Evans defines it as "a special kind of intelligence for thinking about risk and uncertainty", at the core of which is the ability to estimate probabilities accurately. Evans includes a risk intelligence test (RQ) in his book and on his website (below) analogous to IQ or EQ. Computer scientist and risk researcher Jochen L. Leidner distinguishes three types of risk (risk type, likelihood and impact; the latter has also been called loss if expressed in negative financial terms); risk intelligence then is the process of obtaining these three pieces of information for any risk type an entity has non-trivial exposure. Risk intelligence can be obtained manually or with computer support. American financial executive, author, and Columbia University professor Leo Tilman defined risk intelligence as "The organizational ability to think holistically about risk and uncertainty, speak a common risk language, and effectively use forward-looking risk concepts and tools in making better decisions, alleviating threats, capitalizing on opportunities, and creating lasting value." He has argued that risk intelligence is essential to survival, success, and relevance of companies and investors in the post-crisis world. In this latest book Agility: How to Navigate the Unknown and Seize Opportunity in a World of Disruption (2019, co-authored with General Charles H. Jacoby Jr.), Tilman describes risk intelligence as a cornerstone of organizational agility.

Comparison with business intelligence As an emerging concept, risk intelligence shares characteristics with other topics such as business intelligence and competitive intelligence. As such, there are some in those camps who believe that risk intelligence is the set of processes for the transformation of risk data into meaningful and useful information for risk analysis, treatment and planning purposes.

Worked examples

Example 1 — a first encounter with Risk intelligence

Start with the simplest possible case. Write down what Risk intelligence claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Risk intelligence before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Risk intelligence ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Risk intelligence

In research: Risk intelligence appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Risk intelligence in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Risk intelligence is common in secondary-school and first-year university syllabi. It links to neighbouring topics Actuarial science, Business intelligence, Risk analysis, so understanding it makes those chapters shorter.
In everyday life: Look for Risk intelligence outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study Risk intelligence in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Risk intelligence means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain Risk intelligence out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is Risk intelligence in simple terms?

Why does Risk intelligence matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Risk intelligence?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Risk intelligence.