Author : Jaime Menor Jr.
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Introduction
The term "tacit risk" doesn't have a widely recognized or standardized definition in the context of risk management in the Philippines or globally. However, I can provide you with a general understanding of the terms involved.
Tacit Knowledge:
- Tacit knowledge refers to knowledge that is not easily expressed or formalized. It is the type of knowledge that is often intuitive, experiential, and deeply rooted in an individual's personal insights and experiences.
- In the context of risk management, tacit knowledge might be the unspoken understanding or insights that individuals within an organization possess based on their experiences, instincts, and observations.
Tacit Risk in the Philippine Context
In the Philippines, risk management is governed by various laws and regulations, including the Risk Reduction and Preparedness Act of 2010 (Republic Act No. 10121) and the Implementing Rules and Regulations of the Disaster Risk Reduction and Management Act of 2010. These frameworks emphasize the importance of identifying, assessing, and mitigating risks that could impact organizations' objectives and operations. However, they often focus on quantifiable risks, leaving tacit risks somewhat unaddressed.
Considering these definitions, "tacit risk" in the Philippine context could refer to risks not explicitly stated or documented but instead based on the implicit knowledge held by individuals. For example, employees might notice subtle shifts in the political landscape or local market dynamics that could affect the organization’s operations but may not articulate these concerns formally. This could lead to potential pitfalls, such as misaligned strategies or missed opportunities.
Real-World Scenario: Typhoon Preparedness
A poignant example of tacit risk in the Philippines is the management of disaster risks, particularly regarding typhoons. The country is prone to natural disasters, and agencies such as the National Disaster Risk Reduction and Management Council (NDRRMC) are mandated to implement preparedness measures.
Consider a scenario in a local government unit (LGU) during a typhoon season. While there are formal disaster preparedness protocols in place, such as the creation of evacuation centers and relief distribution plans, local officials may have tacit knowledge regarding the community's unique vulnerabilities based on past experiences. For example, a barangay captain may understand that certain neighborhoods are more susceptible to flooding due to their geographical features, a detail that may not be captured in the formal risk assessment.
If this tacit knowledge isn't communicated to decision-makers or included in the formal disaster risk management plan, it could lead to inadequate responses during an emergency. The NDRRMC's guidelines emphasize the need for local knowledge to inform risk management strategies, highlighting the importance of integrating tacit insights into formal frameworks.
Conclusion
Tacit risk represents an essential aspect of risk management that organizations, including those in the Philippines, must acknowledge. By recognizing the value of tacit knowledge and incorporating it into risk assessment processes, organizations can improve their preparedness and resilience against potential threats. Formal regulations, such as the Risk Reduction and Preparedness Act of 2010, provide a solid foundation for risk management, but the integration of personal insights and experiences can enhance these efforts significantly.
By fostering an organizational culture that encourages the sharing of tacit knowledge, businesses and public entities can make more informed decisions and ultimately create a more resilient society.
It's essential to note that the terminology and concepts in risk management can vary across industries and organizations, and new terms may emerge over time. If there have been developments or changes in terminology, I will try to incorporate it on this Blog.
About the author:
The author is a distinguished professional known for his expertise in risk management across various sectors. He holds a Bachelor of Business Administration in Marketing from the Polytechnic University of the Philippines and an MBA in Management from Mondriaan Aura College in Subic. With over a decade of experience in Environmental Management System and Quality Management System auditing, he is a certified Six Sigma Greenbelt. His diverse career includes roles as an Accounting Clerk, Network Administrator, and Regional Marketing Manager, as well as positions in government agencies. As a Quality Management Representative, he developed systems that enhanced quality and operational efficiency, demonstrating his capability to drive positive change.
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