By Rory Kilburn There are several definitions of risk out there. For example:
- From The Oxford Paperback Dictionary – Risk is the possibility of meeting danger or suffering harm; exposure to this, or
- From www.businessdictionary.com – A probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities, and that may be avoided through pre-emptive action, or
- From ISO 31000 – Risk is the impact of uncertainty on objectives
All this is to say that risk has many definitions, and one can say that the definition of risk is often contextual. There is personal or physical risk, financial or economic risk, and reputational risk, all of which can have an impact on an enterprise and its people.
However, risk is essentially a human construct. It is personal – and impacts most on the person who is held accountable for the risk. The impact can be personal in injury to the body or reputation, or financial in the loss of assets or money. In all walks of life, we make decisions to attain – or move towards – objectives, all the while keeping in mind the risks that the decisions may avoid or bring upon us. One often hears the refrain “If I had known then what I know now, I would have done things differently.”
Risk, then, is really the impact of uncertainty on decisions. And Risk Management should be about giving decision-makers at all levels the tools to make an informed decision with confidence.
So how can one help decision-makers know then (before the decision) what they know now (long after the decision? There is always uncertainty with decision-making; we can almost never reduce uncertainty to zero. The aim of a decision support tool should then be to reduce uncertainty to a point where the decision-maker has the confidence to make an effective choice.
RiskLogik has the people, the processes and the tools to give you the decision support you deserve. If you are a decision-maker, and you want to learn how to reduce uncertainty, then contact us.
(Rory Kilburn is Vice President – Risk & Resilience Solutions, RiskLogik)