Guest Post by Malcolm Peart (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
Risk…it’s everywhere whether the risks are known or unknown, foreseeable or unforeseeable but, as the saying goes, “one person’s risk is another’s opportunity”.
Within this risk-opportunity spectrum we have the risk averse, the risk seeking as well as those who purport to manage risk for their business or personal lives.
We also have those who believe that risk is something that happens to other people and those who believe that Murphy’s Law will always apply to them, always, at all times, and in every circumstance.
Within the continuum of risk behaviour we can also have those who knowingly throw caution to the wind. No matter what the likelihood, and even when the consequences have been considered, they carry on regardless.
The legal system has a term for this…recklessness. This behaviour is not just carelessness it’s a conscious decision to embark on a particular course of action even in the knowledge that some harm may arise. The reckless practitioner may truly hope that there will be no dire consequences but there is a compelling belief that it might.
‘Trusting to luck’ and ‘sticking one’s neck out’ or ‘taking a slim chance’ are all symptoms of recklessness and extreme risk taking. Such risk is often considered in terms of time as well as physical or technology matters. However, we also need to consider the business angle. In the cut and thrust of negotiating a contract or closing a deal the economics of poor pricing decisions or cutting a few costs can be put to one side. However, in the euphoria of ‘winning’ such recklessness may be forgotten but, in the fullness of time, it will, inevitably, be uncovered.
At the other extreme of the risk continuum there are those who are so risk averse that almost every risk that has been identified is exaggerated. Likelihoods are rarely ‘rare’ but become ‘almost certain’ while consequences are escalated to ‘catastrophic’ or even ‘apocalyptic’.
The Ancient Roman poet Ovid wrote “The man who has experienced shipwreck shudders even at a calm sea” but for those who would be ‘wreckless’ then taking the metaphorical risk of going to sea is avoided as will be a ‘shipwreck’. “A ship is always safe at shore” prophesized Albert Einstein and some of us may have heard that “Ships in harbour are safe, but that’s not what they are for”. Seafarers and ship owners have always taken risks and while ships continue to sail, they also continue to sink and be wrecked, risks don’t go away.
However, for the wreckless, any potential wreck is avoided at all costs. While they try to avoid the consequences of any risk the possibilities of reaping the rewards of any opportunity are obviated. They may know that something must be done but rather than taking action, albeit blinkered, such action is deferred with myopic indifference to the consequences of inaction.
Between the extreme limits of wrecklessness and recklessness there is a more moderate realm of risk awareness. There is a range of recognizable behaviour from the ever-optimists’ view that ‘every cloud has a silver lining’ to the ever-pessimist’s belief that ‘all that glitters is not gold’.
Of course, pessimists may need to be cautiously optimistic while optimists can temper their enthusiasm with some equally cautious pessimism and consider the downside of risk; it’s not always about opportunism.
Within the resultant middle-ground of awareness is the sweet spot of reasoned risk behaviour and balanced risk management.
In risk management circles we have formal risk management processes, risk registers, risk workshops as well as qualitative and quantitative analyses, tools and simulations. But all of these rely on people to identify and evaluate risks based upon their training, knowledge and experience as well as the lessons they may have learned and hopefully remembered from others.
People have different perceptions of risk and its human nature to be either risk averse or risk seeking depending on the situation. Very few people are in a perpetual state of being risk neutral and either taking or avoiding risks is an essential part of life. John Heywood’s 16th century proverb “Nothing Ventured. Nothing Gained” is applicable to most human ventures but reckless behaviour can result in a loss no matter what while the inaction of wrecklessness is unlikely to bring about any returns.
Between these behavioural extremes of the reckless and the wreckless is the sweet-spot of balanced risk management where risks can be considered both rationally and pragmatically rather than emotionally. However, as humans with our basic instincts of flight or fight we have our own personal bias towards either optimism or pessimism; our collective failures reflect these biases.
And when there is failure, perhaps we should remember the 18th century English poet Alexander Pope’s notion that “To err is human; to forgive, divine” and temper this against Shakespeare’s proverbial concept of “forgive and forget”. If we are in a position to forgive, not only may we forgive but it’s imperative that we learn by not forgetting.
Malcolm Peart is an UK Chartered Engineer & Chartered Geologist with over thirty-five years’ international experience in multicultural environments on large multidisciplinary infrastructure projects including rail, metro, hydro, airports, tunnels, roads and bridges. Skills include project management, contract administration & procurement, and design & construction management skills as Client, Consultant, and Contractor.