Six ways risk management can help you

1. Identify key risks so that you can focus your limited resources on the risks that matter most

It’s the interplay of factors that differentiates risks. Breaking a rule or breaching a standard is just a starting point in determining risk. Going over the speed limit on the freeway is a standard that most of us break routinely. If this is the only risk factor, it’s not a very good indicator of risk. However, it’s a much more risky situation to be going over the speed limit, weaving in and out of traffic, failing to signal, and driving an unsafe car. This driver is reckless and can kill people.

2. More objectivity in decisions

Three nurses breach the same standard. Common sense says the risk in each situation is different, but there are a lot of grey areas. They all have complaints lodged against them for “failing to provide care.” Nurse #1 wasn’t able to provide care because of understaffing and because she was attending to other patients who had more urgent needs. Nurse #2 works in a Long Term Care facility and didn’t provide care because the patient was “difficult” and he didn’t “like this person.” Nurse #3, who has a very bad attitude, didn’t provide care to a patient in a critical care unit because of an argument with co-workers. From a risk perspective, these three situations are vastly different. If 100% represents the potential of death arising from a nurse’s actions, Nurse #3 is probably at about 95%, Nurse #2 is at 55%, and Nurse # 1 is at 10%. (The risk in the #1 situation, however, is systemic and needs to be looked at).

3. Transparent logic to support your decisions and to get others to support them too

A risk framework for making decisions is like an x-ray — it reveals the heart of the matter. Your decision may have 10 lbs of documents that support it. The weight of the documents doesn’t add to the clarity of logic.

4. Develop effective strategies for dealing with challenging situations

Formal risk management adds a sharp focus to what you’re doing. Think of the referees in a hockey game. Good referees, like regulators, understand the history of the players and their coaches, what’s at stake, and the likelihood of unacceptable behavior in the game about to be played. The refs determine in advance a strategy for ensuring a fair game that fans will enjoy that also minimizes player injuries. Part of their strategy may be to tell the teams that they plan to enforce rules that have previously gone un-enforced.

5. A holistic response for the most difficult threats

A headline in today’s paper reads, “New York tries to unclog its arteries.” (The Globe and Mail, September 28, 2006) Banning trans-fat-free oil from use in “2,600 eateries” in the Big Apple may be a starting point. However, will this reduce demand for heart surgery? As an isolated action, not likely — because significant numbers of our fellow citizens will continue to find unhealthy food choices. They’ll overeat and fail to get enough exercise. Billions of dollars of advertising will sell them on lifestyles that will kill them.

What’s the holistic solution? We can learn from from our success in fighting tobacco addition. The defensive strategy had governments regulating the product, the packaging and the advertising. The offensive strategy tackled public acceptance of smoking and, in the face of strong resistance and criticism, public opinion eventually changed. This set the stage for other stakeholders to restrict smoking in public places and generally join the fight. Difficult problems need a holistic solution that comes from the collaboration of partners.

6. Faster decision-making, better decisions

A dog can make a fast and accurate decision using its nose. Good decisions are 90% having the right information and 10% judgment.
A risk framework gets you focused on the decisions you need to make and the information you need to make those decisions. The information may not be in your database. It may be a challenge to procure it and get it reported. The risk framework helps. It gets you to answer important questions. What risks matter? What decisions will I have to make to deal with these risks? What information do I need to make these decisions? How is the information going to be reported?

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