Consideration of Risk

Last week, I shared a personal reflection. As I said then, I continue to process the events. So, for this week, I thought I would take a lighter tack.

Everyone faces an issue that I feel has an unseen hand in much that goes on in our world – Risk. At Forrest, we have begun to develop a robust risk practice, bringing in two well-recognized experts in the field, our associates Rob Quail and Marc Tassé.

However, the risk I am focusing on this week is one we all face daily. It is the risk involved when making a choice. I believe that this risk greatly impacts our day-to-day lives and, in many cases, we don’t realize it.

My good friend and mentor, Jerry Rhodes, says it well; “what hangs over every decision we make is the shadow of risk”.

What I find interesting is that in my line of work, when speaking with clients, until I point out they really need to stop and assess the risk in the decision, they are unconscious of it. Furthermore, when I ask them if they have a framework for determining the risks of a particular choice, they often do not. So, we have a combination of a lack of thinking about risk and not having a way to assess risk… which is the perfect storm.

The signs of this particular combination are the following:

• Lack of decision making characterized by cries of “we need more data!”
• A tendency to deflect and push decision-making up the chain, feeling that “the boss should really decide this”
• An awfulizing and catastrophizing mindset focusing on what may happen: “this, this, and this might go wrong.”

Ultimately, unchecked risk becomes fear, which can paralyze people and organizations.

The natural human reaction to risk is trying to gain certainty through data and information. This search for the truth in data or observation is a falsehood and leads to procrastination as we don’t set level and dig down endlessly.

So, ask yourself how comfortable you are at assessing risk. How comfortable is your organization with evaluating risk?

These two questions lead us to determine our risk appetite. However, at the core, we need to take the risk imposter apart and assess it for its likelihood and severity. When we get good at this, we lift the veil, and we can begin to move forward in our decisions.

I can go on at length here about frameworks and the like, but our first step needs to be awareness of the need to recognize that we may be struggling with risk, and then apply our thinking to make judgements and predictions.