By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.
Partner, RSD Solutions Inc.
It was Franklin D. Roosevelt who
famously said that we “… have nothing to fear but fear itself”. The same might be paraphrased today as “we
have nothing to fear but the regulation of fear itself”.
Fear is a powerful motivating
tool, and likely fear is used as a sneaky political trick in many organizations
to justify expansions of processes designed in part to mitigate risk and the
risk of fear.
One factor that is often ignored
is that many people seem to actually like to live in a state of fear. As a trivial example consider all of the successful
horror movies, or the attraction of ever more stomach churning roller
coasters. In the corporate world fear is
also attractive to the psyche of many people as it allows them to justify their
existence. If the sky is perpetually
falling, then they must be perpetually in place to keep it up.
Ultimately though making
decisions out of fear is generally suboptimal.
Furthermore, fear is not risk and neither is risk equivalent to
fear.
There
is a critical difference between being fearful of risk, and being respectful of
risk. Professional risk managers embrace
and manage risk; amateurs fear risk.
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