Different risk perspectives on riding uncertainty

I

One question that helped precipitate the research on highly reliable socio-technical systems was: Why aren’t there more system accidents and failures, if their technologies are so tightly coupled and interactive?

A symmetrical question has been posed to the high reliability research since then: Why aren’t there more real-time control rooms and centralized operations centers, given there are so many reliability mandates for critical services and critical technologies?

One answer has been obvious to some researchers: There are in fact more control rooms than many outsiders might suppose, if the persisting dearth of research on control room management is any guide.

II

Control of uncertainty is at the heart of professional risk management. Risk management refers to “coordinated activities to direct and control an organization with regard to risk,” according to the standard-setting international guidelines, ISO 31000:2018 (https://www.iso.org/obp/ui/#iso:std:iso:31000:ed-2:v1:en ). “Controls may not always exert the intended or assumed modifying effect,” admit the guidelines, thereby adding to the uncertainty.

The danger in stopping short by organizing around sundered probabilities and consequences of failure (the defining topoi of “risk”) is the illusion of control via risk management. Stranded at your cognitive limits, you don’t realize what you have before you are little more than contingencies associated with aftermaths. If you think otherwise, acting as if you had causal understanding means having to ride uncertainty when you think you’re managing risks.

It’s worth asking then what would risk management look like if we started from our cognitive limits rather than assume we manage risk because our certitudes no longer hold. This means having to take seriously our cognitive limits and biases.

For example, the Fundamental Attribution Error has been defined as: The failure to recognize and explain human behavior by reference to situations in which the person finds himself or herself. If so, are appeals to an absolute priority of universal human rights over the irreducible particularities of being an example of mistaken attribution? Or is one human right to commit that error?

III

Spreading risk in investment focuses on whether or not risks are allocated across a diverse portfolio so as to minimize losses or instead is concentrated in one type of investment or risk. This strategy is taken to be a positive if the risks and/or types of investment are uncorrelated. Even then spreading risk does not automatically make for less uncertainty.

Why? Because risk is a very old, very overwritten policy palimpsest in the public and private sectors. A paragraph like the immediately preceding reads legibly—nouns and verbs appear in order and sense-making is achieved—but none of the previous inscriptions are pane-clear and entire because of the intervening the layers, effacements, and erasures about risk and its management.

That is, words and concepts are grabbed and patched together from different contexts and times in this palimpsest, intertwined and re-assembled for present, at times controverted, purposes:

. . . . .risks spread out……….to minimize losses or not be…………concentrated

Now, that too is “spreading risk”! Albeit considerably less positive.