Having just finished a course on risk management, I have read a lot on the topic lately. I want to share with you a blog post on Seth Godin’s website  which really made me think. In particular, I like this statement: “When things get interesting is when the apparently risky is demonstrably [less safe] than the actually risky. That is when we sometimes become uncomfortable enough with our reliance on the apparent to focus on the actual. Think about that the next time they make you take off your shoes at the airport.”

We all have preconceived notions about risk that affect how we respond to situations and as Godin says, sometimes the things that we think are most risky are actually very safe. Often, the perception of risk is colored by the memory of catastrophic events. Although the possibility of a plane crash is horrific, the chances of being in a plane crash are much lower than the chances of dying or being injured in a car crash. Sometimes when the consequences of an event are very scary, we may tend to overplay the chance of it occurring.

Could it be that some of the everyday decisions made in a workplace are incorrect because of this tendency? It is very possible.

If risk assessment were an absolute process for which we could punch numbers into a computer and come out with a definitive value for risk, then decision-making would be easier. Unfortunately, this is not the case. Risk assessment is complicated by incomplete data, individual perception and a reliance on value judgment.

It is possible that we are limiting organizational performance by avoiding the wrong risks?
According to the Government of Canada, “To be innovative, managers and organizations need to overcome two hurdles, which may actually be two sides of the same coin. One is the abundance of systemic inertia we often note in large, mature enterprises that view new ideas as foreign bodies, which have to be rejected because they do not conform to traditional standards. The other is the level of ingenuity and persistence that is required to implement, to move from invention to innovation.”

How does your organization make sure it avoids risk related to, for example, waste, poorly designed processes, loss of opportunities and complacency?

References:
Godin, Seth. “Apparent risk and actual risk.” Seth godin’s BLOG [www.sethgodin.typepad.com]. October 12, 2009.

Treasury Board of Canada Secretariat. “Risk Innovation and Values: Examining the Tensions.” [www.tbs-sct.gc.ca]. Obtained November 29, 2009.