Comments on: Musing about risk management http://confusedofcalcutta.com/2007/07/01/musing-about-risk-management/ a blog about information Fri, 19 Mar 2010 09:20:53 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: JD http://confusedofcalcutta.com/2007/07/01/musing-about-risk-management/comment-page-1/#comment-156692 JD Thu, 05 Jul 2007 13:55:13 +0000 http://confusedofcalcutta.com/2007/07/01/musing-about-risk-management/#comment-156692 It was nice to read your views on these issues, JP. I am a corporate risk manager and had not read "The risk management of everything." I've read most of it now, and will read the rest soon. Thanks for pointing me to that. It's a good read and a good perspective. Just a couple of days ago I was explaining to a friend my observations on The-Emperor’s-New-Clothes syndrome within the firm where I work. What seems to be driving the syndrome (at least where I have most recently seen it) is a desire to prevent someone from nixing a plan that the instigator believes to be truly best for the business. I have watched people profess that a given decision will have "no negative effects" when everyone in the room knows that there will be a few negative effects, but the good outweighs the bad. In practice, however, the people pitching the idea don't seem to feel like they can say, "Hey, there is real risk here, but also real reward. Our analysis shows that the risk is a good one to take!" Lots more here to talk about, so I am looking forward to more posts from you on this topic! It was nice to read your views on these issues, JP. I am a corporate risk manager and had not read “The risk management of everything.” I’ve read most of it now, and will read the rest soon. Thanks for pointing me to that. It’s a good read and a good perspective.

Just a couple of days ago I was explaining to a friend my observations on The-Emperor’s-New-Clothes syndrome within the firm where I work. What seems to be driving the syndrome (at least where I have most recently seen it) is a desire to prevent someone from nixing a plan that the instigator believes to be truly best for the business. I have watched people profess that a given decision will have “no negative effects” when everyone in the room knows that there will be a few negative effects, but the good outweighs the bad. In practice, however, the people pitching the idea don’t seem to feel like they can say, “Hey, there is real risk here, but also real reward. Our analysis shows that the risk is a good one to take!”

Lots more here to talk about, so I am looking forward to more posts from you on this topic!

]]> By: Louis Naugès http://confusedofcalcutta.com/2007/07/01/musing-about-risk-management/comment-page-1/#comment-156570 Louis Naugès Thu, 05 Jul 2007 07:00:35 +0000 http://confusedofcalcutta.com/2007/07/01/musing-about-risk-management/#comment-156570 Hello, I have taken the liberty of writing a text, on my blog (in French) about this text and your blog. I work mainly with CIOs from large organisations on Web 2.0 solutions and the basic idea of my text is that all French CIOs should link to your blog by RSS. http://nauges.typepad.com/my_weblog/2007/07/dsi-allergie-au.html Congratulations for the very high quality of your texts and ideas. Louis Naugès President Microcost Hello,

I have taken the liberty of writing a text, on my blog (in French) about this text and your blog.
I work mainly with CIOs from large organisations on Web 2.0 solutions and the basic idea of my text is that all French CIOs should link to your blog by RSS.

http://nauges.typepad.com/my_weblog/2007/07/dsi-allergie-au.html

Congratulations for the very high quality of your texts and ideas.

Louis Naugès
President
Microcost

]]> By: MNB http://confusedofcalcutta.com/2007/07/01/musing-about-risk-management/comment-page-1/#comment-155538 MNB Mon, 02 Jul 2007 21:34:35 +0000 http://confusedofcalcutta.com/2007/07/01/musing-about-risk-management/#comment-155538 The-Emperor’s-New-Clothes syndrome. Now what fascinates me most about this is: Why does no one say anything? I'll check your reference. Here's another: DeMarco, Waltzing with bears. Nice preface about Clifford and the ethics of belief (http://en.wikipedia.org/wiki/William_Kingdon_Clifford) The-Emperor’s-New-Clothes syndrome. Now what fascinates me most about this is: Why does no one say anything? I’ll check your reference. Here’s another: DeMarco, Waltzing with bears. Nice preface about Clifford and the ethics of belief (http://en.wikipedia.org/wiki/William_Kingdon_Clifford)

]]> By: JP http://confusedofcalcutta.com/2007/07/01/musing-about-risk-management/comment-page-1/#comment-155352 JP Mon, 02 Jul 2007 10:03:21 +0000 http://confusedofcalcutta.com/2007/07/01/musing-about-risk-management/#comment-155352 Nice to hear from you, Andrew. Nice to hear from you, Andrew.

]]> By: Andrew Yeomans http://confusedofcalcutta.com/2007/07/01/musing-about-risk-management/comment-page-1/#comment-155348 Andrew Yeomans Mon, 02 Jul 2007 09:57:01 +0000 http://confusedofcalcutta.com/2007/07/01/musing-about-risk-management/#comment-155348 Perhaps because it's easier and makes better headlines, media reports tend to only discuss relative risk. Recent examples: http://news.bbc.co.uk/1/hi/health/6229516.stm http://news.bbc.co.uk/1/hi/health/6709101.stm http://news.bbc.co.uk/1/hi/health/4904082.stm. But what matters is absolute risk. The third example is classic; they miss the shocking result that over 10% of the study developed Alzheimers in favour of the higher numbers of 40% lower risk. Frank Duckworth produced an absolute "Richter scale" of risk to make it easier to compare absolute risks: http://www.counton.org/thesum/issue-01/issue-01-page-02.htm has a summary, with more detail in http://www.dartmouth.edu/%7Echance/chance_news/recent_news/chance_news_7.11.html#risk%20index. Nice to know that continuing to smoke 40 cigarettes a day is almost as risky as one round of Russian Roulette. Perhaps because it’s easier and makes better headlines, media reports tend to only discuss relative risk. Recent examples: http://news.bbc.co.uk/1/hi/health/6229516.stm http://news.bbc.co.uk/1/hi/health/6709101.stm http://news.bbc.co.uk/1/hi/health/4904082.stm. But what matters is absolute risk. The third example is classic; they miss the shocking result that over 10% of the study developed Alzheimers in favour of the higher numbers of 40% lower risk.

Frank Duckworth produced an absolute “Richter scale” of risk to make it easier to compare absolute risks: http://www.counton.org/thesum/issue-01/issue-01-page-02.htm has a summary, with more detail in http://www.dartmouth.edu/%7Echance/chance_news/recent_news/chance_news_7.11.html#risk%20index. Nice to know that continuing to smoke 40 cigarettes a day is almost as risky as one round of Russian Roulette.

]]> By: Jag http://confusedofcalcutta.com/2007/07/01/musing-about-risk-management/comment-page-1/#comment-155221 Jag Mon, 02 Jul 2007 03:26:29 +0000 http://confusedofcalcutta.com/2007/07/01/musing-about-risk-management/#comment-155221 JP - Your post reminds me of Feynman's views on Challenger investigation where his estimate for shuttle disaster was 1 in 25. Among NASA engineers, it was 1 in 100 and among NASA management it was 100,000. It is so true that we are living in a culture where we take it as a given that airplanes should not crash, soldiers should not die in wars, trains should not collide, or power grids should not collapse. Complex engineering systems are prone to failure and to make them more robust is a work in progress which needs continuous innovation and investment. I guess it goes back to the fact as human beings we love to fool ourselves by hallucinating that we are living in a deterministic "failure-is-not-an-option" world as opposed to the fact that we live in an uncertain world where things break and people need to learn to fix it and move on. JP, as you say, while "blame culture" is definitely responsible and plays a vital role in the way we run our public conversation, I think it is also critical to recognize how everyone in the organization has a role to play when is comes to stating the facts as facts. So often, we end up blaming the management for disasters, but it is important for engineers, technicians, scientists, and mathematicians - people who are closer to the ground problems – to realize that they are responsible too. Problems may get mellowed down or swept under the carpet as they move up the food chain, but lack of activism, resignation, fear-of-losing-my-job, I-will-mind-my-own-business syndrome demonstrated by scientists and engineers adds on to the problem. I am not saying it is easy to do, but just like anything else having integrity towards one’s trade is hard. But the rewards are great. An organization built with such a focus will have greater competitive advantage to reap the rewards of managing risk and complex systems than the rest. JP – Your post reminds me of Feynman’s views on Challenger investigation where his estimate for shuttle disaster was 1 in 25. Among NASA engineers, it was 1 in 100 and among NASA management it was 100,000. It is so true that we are living in a culture where we take it as a given that airplanes should not crash, soldiers should not die in wars, trains should not collide, or power grids should not collapse. Complex engineering systems are prone to failure and to make them more robust is a work in progress which needs continuous innovation and investment. I guess it goes back to the fact as human beings we love to fool ourselves by hallucinating that we are living in a deterministic “failure-is-not-an-option” world as opposed to the fact that we live in an uncertain world where things break and people need to learn to fix it and move on. JP, as you say, while “blame culture” is definitely responsible and plays a vital role in the way we run our public conversation, I think it is also critical to recognize how everyone in the organization has a role to play when is comes to stating the facts as facts. So often, we end up blaming the management for disasters, but it is important for engineers, technicians, scientists, and mathematicians – people who are closer to the ground problems – to realize that they are responsible too. Problems may get mellowed down or swept under the carpet as they move up the food chain, but lack of activism, resignation, fear-of-losing-my-job, I-will-mind-my-own-business syndrome demonstrated by scientists and engineers adds on to the problem. I am not saying it is easy to do, but just like anything else having integrity towards one’s trade is hard. But the rewards are great. An organization built with such a focus will have greater competitive advantage to reap the rewards of managing risk and complex systems than the rest.

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