What is Risk?

Blair Troutman

Managing Risk

For most of us, risk tends to be an intangible presence in our lives.  It is that lurking unknown that keeps us from doing something or, if we do something, is the nagging pressure that weighs on us that we made the wrong decision.  It is simply the unknown that keeps our organization from reaching its full potential.  It is represented by the hesitancy to make a decision in the face of uncertainty and the concern that, once we have made the decision, perhaps it wasn’t the best decision.  

If only organizations could learn to harness risk, not as an adversary but as a tool that opens doors and focuses our potential, our thoughts, our actions.  Learning how to achieve that requires our addressing three fundament characteristics of risk.

1. Complexity
   Managing risk involves a seemingly infinite number of complex scenarios, all of which play out separately and result in widely different results.  To assist in the risk management process, a wide range of treatises, approaches, and tools have been developed over the past centuries, all with the promise of providing better information to support clearer decision making.  The growing field of machine learning and artificial intelligence will increasingly provide infinitely more data to provide detailed guidance.  The reality is that, flooded with more information, we are making only marginally better decisions.
   

2. Perspective
   The perception and appetite for risk is a complex reflection of an organization’s collective values, experience and circumstance.  Aligning and leveraging  risk perspectives into a broader coordinated and aligned perspective is a significant challenge.  As the number and complexity of stakeholders grows, the challenge of establishing consensus on risk sources, magnitudes, and management strategy grow exponentially.
   

3. Dynamic
   Our decisions are made in the complex and current dynamic environment in which we operate.  The advisability of the decision, once committed to and enacted, has a short time period for which it is optimal, as the fundamental data upon which the decision was based changes and new data becomes available.  Far from identifying the “right” decision, a strategy must address the dynamic nature of risk elements, supporting the continued monitoring and adjustment to reflect the reality of the current situation and newly projected outcomes.

BlueWater 

BlueWater’s risk advisory services are focused on supporting the complex operational, engineering, and financial decision-making that our customers face.  We utilize proprietary reliability and risk management tools to manage complex data, to support improved decision-making, and to communicate effectively to system stakeholders.