Introduction to RRR Framework
We live in a complex and uncertain world
The Risk, Reward, and Resilience (RRR) Framework is a simple yet powerful mental model for decision-making that can be applied across various policy, business and organizational domains. Whether the focus is on policymaking, business operations or ecosystem, the RRR Framework provides a way to think more holistically about complex and interconnected issues.
Watch our Founder explain the RRR Framework at the 2023 Digital Futures Summit
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The RRR Framework provides a structured analytic technique that enables decision-makers to consider the dynamic interplay of three elements—risk, reward and resilience—so that they can act with greater awareness and foresight in pursuit of this goal. Each of these categories is made up from three subcategories, which are factors or variables that influence the existence and extent of the risk, reward or resilience that the actor or system has or faces.
Risk
Risk is the potential harm an individual or organization may suffer as a result of a particular action or set of circumstances. Examples of risks individuals or organizations might face include financial, reputational or physical risks. In terms of drivers, risk is the product of hazard or threat, exposure, and vulnerability:
Hazard or threat: the degree of the danger coming from an external threat (i.e., intentional harms, such as coercion or cyber attacks) or hazard (i.e., non-intentional harms, such as pandemics and extreme weather events).
Exposure: the degree to which an individual or organization comes into contact with that threat or hazard, such as through physical proximity (for example, being located in a region that is prone to earthquakes or extreme weather events) or through interaction with technology (for example, through connecting a computer to the internet).
Vulnerability: the internal characteristics of the individual or organization that affect the degree of harm suffered as a result of exposure to that threat or hazard, e.g., individuals with significant health issues may be more likely to get very sick if they contract a virus or buildings with old structures may be more likely to collapse if they experience an earthquake.
Reward
Reward is the potential benefit an individual or organization can gain from a particular action or set of circumstances. Examples of rewards that individuals or organizations might seek include financial gain, increased market share or improved social status. In terms of drivers, rewards are the product of opportunity, access and capability:
Opportunity: the potential benefits an individual or organization can gain from a particular action or decision, e.g., increased revenue or market share.
Access: availability of resources or information that can be leveraged to achieve the opportunity, e.g., access to capital or data.
Capability: ability of an individual or organization to effectively leverage the opportunity and access, e.g., through skills and expertise.
Resilience
Resilience is the ability of an individual or organization to withstand and recover from shocks and stressors, adapt to changing circumstances, and transform in response to new opportunities or challenges. Examples of resilience include the ability to recover from a crisis, the ability to adapt to changing market conditions, or the ability to transform in response to new technologies or business models. In terms of drivers, resilience is a function of absorptive, adaptive, and transformative capacities. These mean the following:
Absorptive capacity: ability of individual or organization to absorb the shock or stressor without suffering significant negative consequences, e.g. via stockpiles, reserves or relational goodwill.
Adaptive capacity: refers to the ability of an individual or organization to respond to the shock or stressor by making adjustments that allow the system to continue functioning, although in slightly different way, e.g., via innovation or flexibility.
Transformative capacity: ability of an individual or organization to transform the structures and incentives of the underlying system not only to recover from shock but also to fundamentally change the system going forward, e.g. via strategic planning or organizational change.
The appropriate balance among risk, reward and resilience depends on the preferences of the actor and the nature of the environment. Some actors are more risk averse than others. When environments become more risky, actors tend to shift their focus away from thriving and toward what it takes to survive.