Thursday, July 14, 2016

Reactions or Decisions?

By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.
Winston Churchill said that, “Fear is a reaction.  Courage is a decision.”  Much of what passes for risk management is undeniably fear based.  It unfortunately is not based on a proactive basis of making courageous decisions about moving forward.
As I have written many times, risk management should not be about preventing bad things happening, but instead risk management should be about how we can do things better so as to take advantage of uncertainty – that is managing so as to increase the possibility and magnitude of good events happening while mitigating the probability and severity of bad things happening.  If fear is the basis of risk management, not only is it missing half of the equation, but it is also simply just reacting to the last crisis, and not allowing the organization to intelligently go forward.
Ultimately it comes down to if your risk management is fearfully reacting or courageously deciding.

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