The problem with the word “risk”

toddler-standing-on-unsafe.jpg Is this an opportunity to explore, develop skills and confidence? Or, is it unsafe?

In everyday language the word risk expresses our fear about something bad that may happen. We choose not to do something because there is “too great a risk.”

Felix Kloman who is the recently retired editor of Risk Reports has a simple and clear definition for risk that it is simply “deviation from the expected.” It has both positive and negative faces. I like this because, clearly, positive ways of living are important for us as individuals. And in an organizational context, positive action is also vital.

Business people express the idea about the need to take risks; allowing a business the opportunity to fail so that it can achieve more. The “risk taking” of business captures an aspect of the positive side of risk, perhaps inadvertently. It at least recognizes that all business endeavors (opportunities) entail uncertainty (risk) and that value can’t be created without taking on the opportunity.

So what does this mean for regulation which is focused on preventing events that may cause harm? Certainly, regulators need strong strategies to prevent the worst from happening. However, it’s useful to be reminded of two certainties: 1) the risk or uncertainty concerning future events can’t be eliminated; 2) future events can go forward in a negative direction or a positive direction

We all need to understand how we can influence future events in a positive manner.


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