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18 Dec 2017

RISK AVERSION IS STRANGLING US

Why are we so risk averse?

Everywhere you look, it’s at play. And it’s strangling us.

For those that aren’t spotting this, think regulatory requirements, compliance, due diligence, ring-fencing, security systems and, of course, health and safety.

Previously ‘risk averse’ was a term applied to investments. But now it’s being used more loosely to cover all of these activities, around which whole company departments have sprung up.

Yes, of course people need to feel safe and secure but risk aversion is not the be all and end all. There is so much pre-occupation with ‘ticking boxes’ and following procedures, that many employees find it all consuming. So there’s very little time left for people to use their own ingenuity and creativity.

Take procurement. It’s certainly important for businesses to ensure that their suppliers aren’t ripping them off. But constantly driving down purchase prices inevitably means quality can suffer.

The result of all this risk aversion is that there’s too much of playing it safe (through fear of getting it wrong). And not enough pushing of boundaries and pursuing brave approaches.

But there is hope here…

Use of AI in its various forms is actually much more ‘accurate’ than us at ensuring risks are minimized. Its application within financial services, on security for instance, is one example. Although, from recent experiences with one leading bank, these procedures can sometimes become OTT.

But if clever software programmes can now take care of the conformance, that then frees us up to spend more time using our right brains.

We just need to be given more carrots to think freely, rather than be beaten up with the sticks used to minimize risk.

(Pic from Dan Schawbel)