A friend and colleague[1] has written a bit of a rant on risk management in a new blog post: How Can So Many Get Risk Management Wrong? 3 Ways to Fix Your Approach.
Doug Anderson has a wise head on his shoulders, and I agree with everything he says in this piece – which I recommend.
I especially like how he summarizes his position:
When I was part of a management team acquiring and divesting businesses, evaluating capital projects, setting pricing strategy, and exploring investments in new technology, risks were an integral part of each decision. I may have addressed the risks poorly or well, but I was still doing “risk management” as an integral part of making the decision. RM may be best thought of as a mindset and discipline – supported by tools, expertise, and process.
The question is not whether to manage risk, but how to manage risk. Will it be through ad hoc, inconsistent, or poorly-executed actions? Or, through disciplined thinking and structure to make sure it is managed correctly?
I challenge you to rethink how you view RM – a centralized, formal process that has no substantive impact on your organization or a functional discipline that improves decision making. Don’t immediately start with lists of risks, mathematical models, charts, and endless meetings. Instead start with…
