About the Neutrality of Risk

When talking about risk, it’s normal to expect the listener to consider this as a rather negative word. Beyond that, it’s one of the most negatively perceived words out there. I think that the actual definition of risk, however, leaves room for a neutral interpretation and in this article, I would like to explain why I think risk can be both, a good or a bad thing. Not only limited to the professional disciplines of risk management or quality management but about how we tackle life entirely.

Etymology and definition

The origins of the term “risk” go way back and an etymologic path can be traced back to French, Old Italian, and even Latin. The meaning as we know the word today was not always the same though. As per Victor A. Elias, a “risk” is an influence that could affect strategy caused by an incentive or condition that inhibits transformation to quality excellence.

Considering this, a risk is something that could occur and impact what we do or something else. I’d like to think that such an influence, no matter how likely or unlikely, has the potential for a positive effect just as much it has the potential for a negative effect. This is how I would handle it from a project management perspective just as much as I would from a risk management perspective.

In such spheres, I would find positive risk items being named “chance” or “opportunity”, while negative might become an “issue” or even a ‘problem’ if it turns out to be more severe

Managing risk

When making a list out of all the things that could happen, it’s okay to include unlikely events, but you should try to keep it within reason. You can account for a natural disaster but I think it would go too far to include an alien invasion in your overview. All the risks that you identify can be categorized into “impact” and “likelihood”. Those two factors would then determine the “severity” of a risk.

Make sure to include the known knowns and everything you consider as “realistic” and relevant. After you prepared a list, you don’t need to have a mitigation plan for each and every risk but you would then just need to accept it for what it is. You should also check out the article about known unknowns and unknown unknowns that we prepared for you here.

Risk is neutral and subjective

The possible events that would end up being identified as risk are often subjective and whether they become something good or something bad depends on the perspective. If one loses their job, another person might get promoted instead.

In this example, the same event would be positive for one person and negative for another. And yet, the person who has lost their job might even find a better one instead. So it would be a positive result for both of them.

Issues and negative outcomes of risk

This is clear to you already as it is. It’s the popular opinion of what the results are when risks occur. We know risk as something bad to happen. If we see risk, we can build a mitigation plan around it and therewith, prevent issues from becoming problems. And let’s be honest about that one – a problem only remains a problem, if we can’t change it.

Chance and positive outcomes of risk

Have you ever thought about a potential for chance? We are in motion. We always change. People change. Companies change. Our lives change. All events that could occur could be either good, bad, or don’t change anything. Change can be good. Risk can be good. Let’s not think overly negative. Let’s stay open and neutral until we have finally understood all the effects of an event.

Summary

So all in all, it’s good to think about risks that could occur, think about whatever comes to mind, and all the things that could possibly go wrong. This is applicable not only in the business world of project management or finance but also personal projects and other private endeavors.