the thing about risk

Here’s an observation: The less risk there is in doing something, the more time you spend to speak about it. This is about decision making in organisations, and it’s something that just struck me today.

I’ve been in situations where taking risks was just part of the routine – with the occasionally bad outcome that indeed something non-awesome happened. Any action is associated with some level of risk. No action at all is also associated with a risk, at least if you’re a business. Why this is important for me today is that I realised that I’ve spent a significant portion of my day building bridges to stakeholders. Bridges that would allow them to green light the most insignificant change. The sole reason they haven’t so far is: risk.

Now, those people aren’t stupid, there’s probably something to be concerned about. There’s always. The question is: at what point does the notion of actions being risky stop adding value – in the sense that it informs a discussion, helps to steer decisions and so on – and simply turns into a song everyone has heard one too many times.

Risks are incredibly convenient, as are concerns. They’re the rational lipstick on the pig that is both indecisiveness and inaction. However, pointing out risks in itself doesn’t provide value, and as such should only ever be endorsed in combination with an “however”, that demonstrates a path to the desired goal by circumventing or smartly managing a concern.

And here’s where organisations and cultures differ greatly. My personal, steaming hot, take is that organisations that have learned that risk-aversion in itself can steer decisions over time unlearn to realistically rate risks. On the other side of the spectrum, organisations that have a low tolerance for risks blocking progress learn, over time, to estimate risks more accurately. This is because they actually collect evidence of bad outcomes, something that is of critical importance for really understanding risks.

Think of it as an abstract space in which to make decisions. Kind of like a circle, of you need something more visual. Every time you are limiting your decision space by giving in to potential, unrealised risk, you are making that space smaller. You’re delimiting it on the outside, without any real reason to doing so. Now, doing that once is harmless, but what your organisation will adapt to is that new shape, not the previous one. There’s almost no elasticity. And once you start to make that space smaller, something odd happens. If you’re trying to do something that would have been fine 2 years ago, it will be seen as too risky in the present. Not because anything bad happened, not because the real world has moved so much – simply because the organisation changed its risk tolerance.

In organisations that are open to risk – and are conscious that anything can always go wrong – the space in which to make decisions is bigger, and also it’s modelled based on evidence, where available. Healthy organisations know that it’s safe to take a risk – as there is experienced resilience that bad outcomes can and will be dealt with. Healthy cultures don’t give risks and concerns a front row seat in decision making. This is not a text advocating recklessness, it’s advocating being reasonably bold. Healthy organisations know that the biggest risk comes from inaction, not the wrong actions.