by Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.
Policy or judgment is a theme that I come back to again and again when I work with companies and their risk management departments on developing and implementing risk strategies. In this age of regulation, the stress is increasingly becoming that of developing a strong airtight policy and then following that policy to the letter. Judgment is better left solely for deciding on your sense of fashion.
My philosophy is that you need both. You do not want people and groups in an organization making up decisions ad hoc in the moment – particularly when it relates to risk issues that could have major implications. Conversely it has to be recognized that no risk policy is airtight and fool-proof. Something is inevitably going to come up that knocks it for a loop.
Policy or judgment came up in the news today. You likely heard the story about the lifeguard who was fired for saving a life. The problem is that the life saved was that of someone who was swimming outside of the zone that the lifeguard was responsible for. Policy was that lifeguards should only concern themselves with swimmers in their zone. Since the lifeguard went out of his zone he was fired. The company stated that the firing was for insurance reasons (good job on passing the buck on responsibility there!).
You can argue this many ways. While the lifeguard was busy saving someone outside of the designated zone, a swimmer could have run into distress while swimming in the proper zone. Other arguments can be made as well. The point is that the lifeguard made a judgment call over policy. Personally I believe it was the right call. Imagine being a lifeguard and having someone drown within your sight, and within your ability to help them and you did nothing because of policy. How would that feel for the rest of your life?
Does your company allow for exceptions of judgment, or would your company do the equivalent of letting the person drown? What would you do if an analogous situation occurred at your company? How would you or your colleagues deal with the authority figures at your company and the authorized policy? What would Stanley Milgram think?
For more on this, follow the link: http://en.wikipedia.org/wiki/Milgram_experiment
