Monday, 20 June 2011

Risk management

When Ferdinand von Prondzynski says:

Those who manage risk registers may feel that their efforts produce sounder policies, as indeed they possibly do. But they also breed an atmosphere of strategic timidity in which the unknown is regarded with suspicion.
He's talking about me. And to be honest this is one of the attitudes I often see in senior university managers that I find personally irritating, so I had better be careful in exactly what I say.

Taking a risk when you understand what the risk is may require courage. Taking a risk that you don't understand can only be foolhardy. It's difficult to respect those who seem to see foolhardiness and timidity as the only options available to them.


  1. How quantifiable is risk, though?

    It's not that risk management causes timidity (I think the opposite, people decide what to do and then manage the risk). What I worry about is risk management numbers being seen as absolute and people doing foolhardy things as a result of incorrect analysis. Sub-prime mortgage lending springs to mind... that was a failure in risk management, as the risk was treated as something that could be abstracted.

  2. David

    Our experience must have been very different. If I saw people deciding what to do then managing the risk (let alone doing that on the basis of analysis, incorrect or otherwise), this issue wouldn't make me so grumpy. Instead I see (senior) people deciding what to do and then pretending that there are no risks to doing it.

    Or I see them, like Ferdinand here, shooting the messenger as if that excused their own timidity.

    Glad your experience has been more positive than mine.

  3. I have offen had differences with Ferdinand. But he is spot on here!

  4. Thanks for your comment Norman. Everyone's entitled to their own opinion.