by Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.
We spend way too much time trying to be perfect in our risk management. Media, bosses, supervisors, shareholders, creditors, regulators et. al. want their respective organizations to not have any missteps. However this is very poor risk management in my opinion. Being perfect has many flaws to it. First off it creates a sense of arrogance, overconfidence and hubris that is way more dangerous than any series of small missteps. Secondly there is the case of risk homeostasis that I have written about before at length.
The main thing though that I want to mention in this blog is that small missteps prevent the big one. Small missteps allow the organization to learn and adapt. Small missteps allow the internal risk of an organization to let off some steam. They prevent risks from building to an unsustainable level of criticality that will inevitably become unstoppable. Small missteps are good, not bad.
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