Simulations and war games: This is not a test | Deloitte US | Human Capital has been added to your bookmarks.
This is not a test
Simulations and war games help manage risk
How do you plan for the next black swan? For years, United States military and intelligence agencies have used simulations and war gaming to determine their readiness for events that are not easily predictable. In light of the financial crisis and heightened financial reform, financial organizations have the opportunity to employ simulation and war gaming as a way to develop the organizational resilience to manage risk more effectively in the future.
While Systemically Important Financial Institutions (SIFIs) are now required to prepare Recovery and Resolution Plans, those plans will only be effective if they are developed collaboratively, refined through practice, and understood well by a broad group of stakeholders. And although one might argue that the human element of past catastrophes was impossible to foresee, organizations need to recognize the value that preparedness tools can provide. With the widespread use of simulations and war gaming techniques amongst global financial organizations, “prevention” may indeed be the new “preparedness.”