Digital isn’t always binary and other mature conversations about risk

Immature conversations about risk are prevalent in today’s society.  Whether it be in politics or in business, it feels like we are immature when it comes to discussing uncertainty.  

It doesn’t have to be that way.

The drive for binary-type “it is or it isn’t”, “yes or no” responses to questions about uncertainty comes at a cost – typically resulting in a lack of understanding about the true nature of the uncertainty and the opportunity it presents.  Why do we do that when we should all know that risks tend to be best characterised by distributions rather than sweeping descriptors of a binary nature?

I can see it in political interviews.  I witness it in Board meetings (and sub-committee meetings).  I encounter it Steering Group meetings for major programmes.  Corporate transaction activity is not averse to it either.  Annual Reports & Accounts are sometimes manifestations of the problem too.  The opportunity for progress seems to be everywhere.

If we could have more mature conversations about risk it might:

1. Help us (business people, politicians, everyone) take better steps now to deal with global warming, ageing populations and gambling addictions
2. Help us be more confident in the likely success of business, political strategies and major programs and smarter in our approach to agility
3. Help us avoid making guarantees and promises that might not be kept, thus improving trust and true confidence

Can you imagine being able to place greater trust in management information because it was more transparent on risks and smarter on how risks and issues were escalated and priorities set in response?

Can you imagine being able to have faith that statements about risk levels would be met with mature and proportionate responses from investors, regulators, employee groups and other stakeholders?

The good news is, we can move in that direction but if it is such a good thing to pursue then what would actually bring about improvement i.e. more mature dialogue?

We can’t just wave a magic wand and expect dialogue to mature overnight after being the way it has been for so long.  Also, a unilateral approach would be crazy for any individual person or company.  All stakeholders (or at least enough of them) need to be reliable when it comes to having a mature conversation about the true nature of risks and uncertainties.  

I suppose that's one of the things that make it difficult.

Education seems important.  I don’t just mean improving the quality of education in schools and universities about the nature of uncertainty and how it affects so many things, bringing opportunity to exploit and risks to be managed.  I think we all need more education on risk and especially how to deal with risks which relate to our changing world like, for example, the non-binary nature of the upsides and downsides presented by digital (if you’ll pardon the “binary” pun).

Whether it be about truly understanding risk ourselves or influencing/ nudging/ strongly encouraging others to be adopt a more mature approach to dealing with it, the opportunity to make progress through some form of education, backed up with practical experience of how things can be better is clear.

Maybe we will miss the boat.  Maybe humans don’t have the capacity or desire to have economic dialogue about risk.  Maybe it scares us all too much which is why we prefer the “tell me it’s certain” approach to politics and business.  

Then again, maybe we can do this – one step at a time.  Maybe we can take the opportunity to improve discussion about risk by emphasising the stochastic nature of most risks at every opportunity (even if they are difficult to quantify with precision).  Maybe sparks of courage and competence will raise the game at the expense of some in the short term but ultimately for the benefit of everyone.

Come on, we can do this.