The financial crisis has precipitated a crisis in understanding risk management: methods (especially regulatory ones) that were ‘leading-edge’ were shown to be built on flawed understanding; partial adoption of methods and processes were exposed; organisational behaviour was shown not to the presumed routines of linear risk processes. Financial services business almost uniformly got it wrong; so did the regulator and supervisors and central bankers.

Outside financial services the ubiquitous, linear models of risk management based on standards and over-simplified ‘best practices’ are no more robust or useful. While non-financial businesses cannot build up systemic risk, the common practices of risk management are simply not fit for purpose. Increasingly, anecdotal evidence is showing that qualitative guess-work on risk is unreliable and amplifies, rather than reduces risk – by encouraging the illusion of control among executives and board members.

We need to return risk management to analysis, practices and behaviours that make sense. What matters is not what we know about and can manage (the stuff of risk registers); what matters is what changes in our environments, firms and assumptions. Risk is change.

Too often, firms simplify risk in to easy-to-operate routines. These routines have their place for project and initiative tracking but, at firm or enterprise level, they obscure through over-simplification. There are no short-cuts to meaningful analysis or understanding of risk, uncertainty, ambiguity or complexity. We work with boards, executive and management teams to understand firms’ risk contexts and to assist them to anticipate risk, understand and value it, build resilience against risk and respond to it more effectively if it manifests.

We change firms’ and individuals’ understanding of risk. That’s why we are effective.

RISK PERCEPTION IN SOCIETY