Tuesday, May 8, 2012

How Big is Your Risk Appetite?

You are walking toward your car through a dark parking lot late at night. You hear a noise behind you. You look back and see nothing and continue at a slightly faster pace. You hear another noise behind you- again no one. What do you do at this point? The answer is simple- you either turn and run away or you turn back and face whatever it is. One of these two responses is hard-wired into our brains.

Even though our human fight-or-flight is part of our DNA, some things do influence what we actually fear; such as the culture we grew up in. For example, people in South American jungles do not fear large insects, snakes and other reptiles because they grew up with them. But if I were to see a python, I would run immediately. Conversely, if a person from South America were to see Lady Gaga walking down the street, they might want to run away just as fast!

When your organization faces a deadly risk, does it fight or does it run far away from it? More importantly, does your organization influence, foster or try to overrule the natural response of your employees?

In order to be able to face your true risks and not run from them, you must first understand what those risks are. Does your organization actually know what risks they are facing in the future? The first step is to perform an overall risk assessment. This requires a very thorough evaluation with assets, employees, customers, and suppliers. After you know what your risks are, it is much easier to get your people behind dealing with the issues. If we need to “hardwire” anything in an organization, I think it’s better to focus on embedding day-to-day risk management capabilities in the organization that routinely seek out those “scary sounds in the night” and decide on how to handle them individually.

Bobby Bland PWCA, CIC
Commercial Risk Service

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