Dylan Evans, in his book “Risk Intelligence – How to Live With Uncertainty” (note: affiliate link) defines Risk Intelligence as:
… the ability to gauge the limits of your own knowledge — to be cautious when you don’t know much, and to be confident when, by contrast, you know a lot…This is a vital skill to develop, as our ability to cope with uncertainty is one of the most important requirements for success in life, yet also one of the most neglected. We may not appreciate just how often we’re required to exercise it, and how much impact our ability to do so can have on our lives, and even on the whole of society.
The application of Risk Intelligence is evident through the strategy and approach we take to risk mitigation. To demonstrate this point let’s explore the following scenario:
Your project operates in a corporate building at the heart of Melbourne CBD (not sure where it is? check HERE). Melbourne is known for the stability of its essential services and the likelihood of any disturbances to power or water supply is very low.
Now, consider the following scenarios:
1. A power supply failure in central America last week has caused wide range damages to commercial and industrial businesses with production loss of $1B.
2. A power supply failure in Sydney (800 KM east of Melbourne) last week has caused some disturbances and loss of productivity for a number of hours.
3. A power supply failure in your building last week affected another project in the company and resulted in loss of data and long recovery time.
Applying Risk Intelligence means that rather than respond in a knee-jerk reaction you need to ensure your response is appropriate and that you don’t adjust your risk appetite unjustifiably.
Each of the scenarios outlined above could affect your attitude. While, under normal circumstances, you would not consider the possibility of a power failure as a big risk, the proximity of an event – unlikely as it might be – might change your attitude. And as Dale Evans articulates in his book (in the context of the application of airport security measures as a result of the 9/11 attacks), your reaction might be more of a lip service to appease stakeholders’ public opinion, than an actual risk mitigation or a cost-effective one.
The lesson here is that being aware of our cognitive deficiencies is one step ahead of the crowd. You can’t avoid it but you certainly be aware that it will come and thus consider it as a possibility when consider your reaction.
Think about it!