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Risk management: time for a re-think

May 14, 2015

Over-hyped, inward-looking, of no practical use or value. That’s the conclusion any rational leader would reach in an objective analysis of the sprawling risk-management industry.

Recognizing and grasping opportunity lies at the heart of human and social development. Everything that can go right can also go wrong. Achieving balance is the core of commercial management and resides in attitudes, intelligence, adaptive design – not the mumbo-jumbo of self-serving specialists.

Life is not measured by slide rules. It is often unpredictable and we weather much of that unpredictability through exercising judgment. As a discipline, risk management tries to take us back to the days when medicine was performed by ‘balancing of the humors’. It served no practical purpose and often left the patient far worse off than they were before they exposed themselves to ‘the experts’.

 

2 Comments
  1. Tim – a promising start – is there more to the article? I agree that the RM toolkit can do more harm than good in the hands of practitioners who lack the context provided by experience. In major capital projects, the RM folks who compiled the risk register and ran the QRA on cost and schedule estimates prior to FID, rarely (if ever) circle back once the project is finished to assess the accuracy of their work, or even its utility. Without this feedback loop, the early work will always be done in a vacuum and lend itself to box-ticking stage-gate reviews as opposed to a vital tool for correcting the course of wayward projects.

  2. Tim, I really like the direction. There is a role for a pragmatic, consistent, less quantitative approach to risk management. But you are on target about the inward-looking nature of the discipline. It causes many senior leaders to disengage with risk management, because risk professional become pretty esoteric.

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