Column: Risk Management

The Upside of Uncertainty

By: | October 15, 2015

Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

Just recently, a friend needed some help with a tough decision and wanted to sound out her decision process between two job opportunities. Both options were full of uncertainty.

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When we spoke about her potential bosses, she was uncertain if they were good people. In other words, she feared they may not be very nice.

When we spoke of the job security, she was uncertain one organization was stable. In other words, she feared her job may be short term.

When we spoke of her potential for succession, she was uncertain there was room to grow. In other words, she feared her job would be a dead end.

The conversation got a bit draining. When I sat back to think about why, I realized that we covered only the uncertainty of negative things. Her decision process was driven mostly by fear and pessimism and she failed to be inspired by faith and opportunity.

But it seems, we all tend to do that. I think of the expression: “Where there is mystery, the human mind tends to go to dark places.” I have often used that expression in my speaking engagements when I try to convey the idea of “upside risk.”

Her decision process was driven mostly by fear and pessimism and she failed to be inspired by faith and opportunity.

Imagine you are walking down the hall at the office. You see two colleagues chatting in the distance. As they see you approach, they quickly stop talking. It is obvious they stopped because of your proximity.

So let us take an honest vote. Who would think that your colleagues were gossiping about you and curtailed the conversation so as to not hurt you?

Conversely, who would think they stopped talking because they did not want you to overhear details of the surprise birthday party they were planning for you?

When things are uncertain, why immediately associate it to something negative when we also have the opportunity for it to be positive? That is the paradoxical beauty of uncertainty. When nothing is sure, everything is possible. Uncertainty should fuel opportunity too. That is what we call “upside risk.”

People and businesses assess risk, mine data, carve learnings from past experiences and we do our “due diligence.” But often we only do this to gain more certainty around negative things that can happen.

However, true enterprise risk management organizations, mature ones, conduct “upside risk” assessments too. Upside risks act as your organization’s natural hedges against your ever more popular “downside risk.”

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Our human condition naturally makes it difficult to do “upside risk” assessments. If you don’t believe me, facilitate a risk assessment session where at first you only elicit negative risks. Then switch. Ask the group to talk about things that “could go overly right” in your organization.

You will be inundated with negative risks. Moreover, you’ll find the longer the negative risk list, people will feel more certain and secure by knowing you have captured the scary business monsters and now have actionable risk attack plans for them. I take no issue with that. That is good risk management. But it is only one side of the story.

Your upside risk list will be much shorter. I truly feel we need to do a better job at identifying what should be on that list.

Not only would the assessment be conducted in a much more pleasant headspace, but the longer we can make the upside risk list, people will feel more certain and secure. They’ll know they have captured their great business opportunities and now have an actionable risk-fostering plan for those opportunities.

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The R&I Editorial Team can be reached at [email protected]