By
Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.
Partner, RSD Solutions Inc.
I recently reread the wonderful
book “The Lessons of History” by Will and Ariel Durant. In this small volume, the noted historians
sum up some of the key themes that history has continually exhibited. Among these recurring themes, the Durants
point out that history teaches us that “peace is an unstable equilibrium”. It is an unfortunate but indisputable fact;
peace is rare while war and instability are the constants.
A large part of good management
is acknowledging and managing with the facts, rather than managing under a
fairy tale system constructed out of how you wish things were. Just as peace is an unstable equilibrium, so
is the absence of risk. Risk free business
is an unstable equilibrium is a fact repeatedly taught to us by the history of
business.
While
peace being an unstable equilibrium is lamentable, risk free business being an
unstable equilibrium is not. Successful
managers are those who realize that risk always exists (remembering that risk
is the possibility that bad or good things may happen) and furthermore they
embrace the fact that risk always exists.
Pretending otherwise is simply naïve, foolish and dangerous.
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