Thoughts on Risk

Reading “The Six Mistakes Executives Make in Risk Management”, HBR, October 2009:

The risks of not succeeding in the mundane tasks that are part of our operating plan are far more significant than what might happen in some outlying situation.  Things happen and we need to do what we can to insure for the consequences, but we can’t insure against them.

I like the point about listening more to the “don’ts” than the “do’s”.  More of a balance seems worth the time.

There is a good, though well worn, reminder that HOW you phrase a risk influences how it’s perceived and whether it’s acted on appropriately.

I love the point on redundancy and, to take the metaphor in the article further, sometimes it’s healthy to divide a function between two or more structural elements to reduce the risk that a single thread might bring down the house.  Human’s are single-threaded in some ways, and not in others.  Organizations, because they can adapt, could also bring internal competition and experimentation if the potential for failure can be spread.  The loss of efficiency might be more than offset by the gain in creativity.

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