Risk Scenarios: “That Could Never Happen”
Ever been presented with opinions from colleagues, when thinking about risk scenarios for your business, that convey the sense “that could never happen”? It is certainly not an uncommon occurrence in such discussions. In many cases it is perhaps a valid view to take, particularly if the risk scenarios being discussed are physically impossible or well honed controls militate against all possible negative impacts. In other cases it is however more of a statement of hope, built on the premise that because the observer has never personally experienced certain risk scenarios then it must be true that they could never occur. This is of course a falsehood.
There are plenty of examples of cases in which risk scenarios that occurred perhaps seemed impossible but nonetheless materialised. Consider the scale and losses in the 2005 Buncefield explosion and fire that exceeded previous expectations of what might occur in such an incident. More recently an aircraft broke down at the junction of two runways just before the busy morning rush. This severely disrupted the airport for a day being as it was “right at the wrong time and right in the wrong place”. Who would rate that exact risk scenario as very likely I wonder?
In ancient times we would have kept an eye out for the augurs to warn us of impending doom. Birds flying the wrong way, odd meteorological events or even sacred chickens. Today we are of course a little more scientific with our risk registers, complete with likelihood and impact ratings, but are we more accurate? Well of course we are in terms of the pure ‘science of it all’ but we are still the same types of people as those who wondered what the sacred chickens had to say on a subject. We are still prone to personal biases, reading what we want into the information available to us, wishing for the best and generally thinking all will work out well in the end – “it could never happen here” after all.
What can we do about it? Well we need to continue with the risk scenario based analysis and planning of course but we need to be flexible in how we interpret things. Risk registers are no more precise indicators of future events than augurs of the past perhaps. We therefore need to think in terms of best case and worst case outcomes and ensure we adequately consider the most likely worst case when we assess risk scenarios. If it seems unlikely, but is still possible, and it could really ruin your day, then don’t discount it. Plan for it. If someone dismisses a risk scenario just because their own frame of reference does not easily accept it challenge them. Don’t be paranoid that the world is out to get you but conversely don’t reject out of hand risk scenarios just because they seem fanciful at first glance.