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Internalising Risk

March 20, 2012

No matter what level of career you are at, you’ve probably come across the term risk management. To most technical people, it means nothing.  If anything, it is one of those bullshit bingo-type terms that gets used for a made-up discipline that floats around in upper middle management.

In safety and risk engineering, risk management is something we twist. We decide that ‘risk’ is safety related and that ‘risk management’ mostly means the controls we put in place to stop our operations from going wrong – e.g. deluge systems for a fire risk, control systems for a process risk or cleanup measures for an environmental risk.

The thing is, though, that risk management is bigger than that.  Which is exactly why the niche market exists for those upper middle management-types.  Take, for example, your simple act of putting in a deluge system to manage what happens when a fire breaks out.  Inadvertently you are also making the following decisions:

  • I choose not to put controls in place to prevent the fire;
  • I choose not to use an alternative system, such as inert gas, to suppress my fire;
  • I choose to put an unspoken value on the outcome of the fire to accurately cost the deluge system;
  • I choose to take responsibility for the outcomes if my chosen deluge system fails.

Recently Engineers Australia has revamped their Chartership requirements and added a requirement for all Chartered engineers to have a component of risk management to their experience. “But that’s a niche discipline,” yelped one fellow reviewing the new requirements, “how is a design engineer to get experience doing something reserved for upper management?”

I think this is one of the issues with the classic engineering brain.  Just because you are designing a pipe or a widget or a jet engine doesn’t mean you are only doing design.  The fellow mentioned above probably manages risk every day without even realising it.  I’d venture to bet that for almost every decision he makes he weighs options, see the option benefits and pitfalls, decides on the most acceptable outcomes and chooses the option that minimises the risks posed to his design.

But What Do You Mean By Internalising Risk?

One of the things we most often struggle with is helping our clients to genuinely understand the risk that they are accepting when they authorise one solution over another.  Giving someone numbers like “your risk is 1.3×10-6 for this situation” doesn’t adequately illustrate the fact that they’ve chosen to accept an increase in their personal and/or corporate liability for the benefit of production.  They’ve taken on the possibility of a bad thing happening in the future in exchange for a productive thing happening now.

Recently the Scout and I bought a house overseas – a house we’d never even seen.  This particular house is on a transmission line clear way hosting high voltage power lines which – if you read the interwebs – can generate magnetic waves capable of producing illness, disease and even death.  There are vague links to childhood leukemia, a couple of recorded studies on spontaneous abortion and many reports of people feeling ill due to the Gaussian waves produced by transmitting electricity down the line.

Sounds like a big deal, right?  So the Scout and I had to decide if we were happy to buy the house (which was everything we’d been looking for minus the transmission lines of death).

Given that Gaussian waves are not my area of expertise (oh, really?), I did what I’d hope most people in such a position would do.  I read.  I read everything I could find on the topic – the inflammatory anti-science stuff, the peer-reviewed journal stuff, the in-betweeny semi-science-y stuff.  I read enough that I felt like I owned the problem, and that I could make an informed decision about how much risk I would take on.

In the end it boiled down to a few allowable numbers summarised as: if a 2 milligauss limit is good enough for the WHO, it’d be good enough for me.

So again, I did what any technically inclined type might venture to do next – I bought a gaussmeter… and made my crazed sisters creep around behind the backyard of our potential purchase to measure the Gaussian field generated at peak power time.

Success!! Only 1 milligauss!!

Sure, it wasn’t 0 milligauss, like many of the suburbs we’ve measured since, but it also wasn’t 8 milligauss which is what the meter read on the drive home at points.

So we decided to buy it. And in doing so we also made the following decisions:

  • I choose to trust the science behind the numbers at the WHO;
  • I choose to balance my fear of the unknown with the conclusions of the papers I’ve read;
  • I choose to take responsibility for any ill effects that my family could suffer from living in such proximity to the power lines.

Which is really the crux of the thing: to fully take responsibility for the risk I was accepting.

Often this is lacking in the decisions that each of us make at work.  Often ownership of the problem seems so difficult that it’s easier to make a decision and ignore the risks.  Often it is much easier to be the middle man who doesn’t actually make the decision, but presents the information for someone else to judge.  Often the bureaucracy of large operating companies makes it easy to never be the person to internalise the risk and make the right decision.  Taking responsibility is scary.

Unfortunately in the case of my clients, though, they are playing with the lives of other people.  They do not have the luxury of ignoring the choices involved in managing their risks.  In the end, someone needs to take the responsibility.

It’s also worth watching the money trail – those who take the required responsibility are often the ones benefitting monetarily from their ability to manage the risks that they must choose to accept or decline daily.

To end, I offer this – a guide for understanding, internalising, and managing risk effectively:

  • I acknowledge that I do not have all the information; but
  • I acknowledge that a decision has to be made without certainty.
  • I choose to manage my liability by learning as much as I can; and
  • I choose to make a decision with the information I have at hand.

But finally and most importantly:

  • I choose to take responsibility for this decision.

Slide 14 (test tubes) courtesy cambodia4kidsorg; Electromagnetic Wave courtesy waljoris on Flickr.


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2 Comments leave one →
  1. March 20, 2012 8:14 pm

    Excellent thoughts on risk management, Aurian. Very timely for myself also as I am looking into the field of “risk management” for a book collaboration project I am working on. I think your key 5 points about personal alignment with dealing with uncertainty are bang on, and an excellent model to work from. Great post!


    • March 21, 2012 7:51 am

      A book collaboration, Tim? Very exciting. I look forward to hearing more about it!

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