PrevNext

Identifying Risk

What is Risk?

Risk is probably the most overlooked aspect in our conscious lives. Humanity's most powerful emotion is fear and is in fact based on risk assessment. Instinctively we constantly scan for risk, that is, what can threaten our survival directly or by negatively impacting our efforts. Predators that want to attack us and/or eat us, snakes and spiders, falling objects, dangerous people, fast moving objects, the list goes on. These survival assessments happen in the unconscious mind and operates on current real events and actions. That is we respond to threats as they happen. We either challenge them or flee them - fight or flight!

Risk Assessment

Things known to us have already been classified, firstly whether it is a risk to us or not, then by other criteria. That is why we do not fear our pet cat eating us as we have already assessed a pussycat as different from a tiger.

 

KittyTiger

 

Our conscious minds are not as efficient as the subconscious mind and we need to actively identify risk in thought processes like problem solving. We have to remember to perform these tasks, and with self-discipline can make it a habit.

 

Humans are optimistic by nature. We mostly believe, and to our disadvantage, that things will work out for the best. "That lump on my hand will go away", "That car speeding towards me will swerve", or "I will ace the test". What if the lump is skin cancer? What if the car's driver cannot see you? What if you did not study an important chapter that no-one told you about?

 

When making an assessment we commonly think "What if I'm right?", for example "I can make a million dollars". If a risk assessment showed that there was a 1 in 500,000,000 chance of making a million dollars and a 1 in 20 chance of loosing everything you owned would you go ahead and do it?

Risk Management Explained

Risk management involves a planner taking take the time to review the tasks to be performed and assessing where the 'failure' points are. The assessor then develops strategies and secondary plans which allow the people executing the task to bring it back to an acceptable situation for a positive result. When assessing risk the first question that needs to be asked is "What if I'm wrong?". Applying risk management techniques to planning greatly increases the chance of success.

 

We cannot consider everything when making a decision, and even if we can consider most aspects, uncertainty will certainly throw a spanner in the works. We must consider the probabilities of certain outcomes when assessing risk.

 

Spanner in the works

 

This is why successful problem solvers almost always have backup plans in case things do not go as planned. They assess for success and for unsuccessful outcomes, and the more knowledgeable people plan more for unsuccessful outcomes by having excellent plans. Personal experience and the ability to listen to experience also improves the risk management.

 

Risks to be aware of;

Some risk reduction techniques to consider;

Further Reading

Risk Management (wikipedia)