A Short Sermon on Risk Management
- Risk Management is the attempt to anticipate and prevent or mitigate harms that may be avoidable.
- Good Risk Management is inherently simple; adding too many complexities increases the likelihood of overlooking the obvious.
- There are three guidelines for effective Risk Management practice:
- Use Foresight (don’t wait until you are blindsided by risk);
- Exercise Precaution (allow a decent margin of safety for unexpected events);
- Put a floor under the Downside Risk (lower the likelihood of catastrophic losses).
See also Ten Rules of Risk Communication.