Trust

By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.

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I believe that much of risk management is about issues of trust.  If you think about it, most risk management procedures are put in place because those who think that they know better do not trust others to do the right thing. 

Sometimes this lack of trust makes sense as the right thing may be counter-intuitive.  For instance almost every parent on a plane would have the instinct to make sure their child can breathe if the oxygen mask deploy and thus put the mask on their child first, rather than on themselves first.  However this would be imprudent because if the parent becomes incapacitated then they will be unable to help both themselves as well as their child.

However most of the time the right thing to do is the intuitive thing, and if you place your trust in people then they will indeed do the right thing.  However the trust is often put into the risk management system instead.  Not trusting people, and instead trusting a system is demeaning to people – particularly in a corporate setting.  The way risk management systems are sometimes enforced makes employees feel like children.  This is obviously not effective nor is it desirable on many different levels.

I believe that if you trust people to do the right thing that they will indeed make mistakes, but I also believe that if you trust them to do the right thing they will make far fewer mistakes, and they will indeed be mistakes and not outright sabotage.