Risk, a Product: what a bewildering idea!

Actually, it’s not quite a bewildering idea.

RISK = PRODUCT
When we look at some official definitions of risk, such as “the possibility of incurring misfortune or loss” and “to act in spite of the possibility of injury or loss”, and we compare them with the ISO 9000 definition of ‘product’, that is “result of a process” (3.4.2), any enterprise, that is a process, may incur in misfortune, injury or loss.

Therefore, the equation holds true: risk = product.

Being myself a tough supporter of some of the basic ISO 9001 principles, I find it quite easy to go about risk processing, thinking of it as of a ‘product.’

ISO 9001 Introduction point 0.1 a) “organizational environment” implies the following regarding risk processing: one has to know where one stands, and where one’s going to move to; be the environment a jungle, the Himalaya mountains, a New York street, a Pretoria district.

Risk is both connected to one’s viewpoint (standpoint) and to one’s destination.  And, remember, both are ‘products’, results of processes.

RISK MANAGEMENT SYSTEMS
I usually don’t care much for ISO 9001 requirements on documentation.  I don’t support illiteracy.  I’m a books glutton myself; but I don’t believe that any management system – especially risk processing systems – based on documentation-mania will ever be effective – let alone efficient.

Management Responsibility: this is the Achilles’ heel of any management system, even more when handling risks.  Because management often seesaws stable systems, management can’t even try to ride any dynamic risk processing system.  In spite of any statement, management is by definition static, they live on the status quo, hic et nunc, the only change they think of is for their own benefit.

Profit uber alles, that’s the true policy and mission in any company.  And – as the sage says – their reason for living will be the cause of management’s death.

Curiously enough, ISO 9001 doesn’t address management authority.  This could be a mistake

Resources management: it is the biggest joke of any management system.

The anthem ‘people are our most important resources’ is what it is, an anthem.  We’ll see in a few lines what risks are connected with ‘our most important resources.’  We don’t see this too often in organizations any more.

TODAY’S CRITICAL WORDS AND CONCEPTS
Saving …  Cutting ..  Reducing …  Leaning out …

I don’t object to saving and the other words.  Wasting money is a sin – a major sin – itself; but saving needs too be balanced against risk.  I may save money not replacing my car’s worn tires, but what are the risks I will surely incur in?

I shift my company to a low-labor-cost country, or I hire low-cost labor.  If my processes are easy enough I will only have to take care of the transportation risks from – let’s say – Korea to Connecticut; which are all but insignificant.

But if my processes are complex and I hire low cost, therefore low culture labor, I must only expect that my first operations will be a nightmare, in terms of effectiveness and efficiency.

RISK PROCESSING
Risk processing, once more.

Planning: I think that most people think that it has something to do with aquaplaning or something similar.  At least, this is the impression they give, when they try to think in advance.  Effective risk processing is a before-event activity, after-event activity is like closing the stable gate when the oxen are gone.  I’ll never insist enough on the importance of effective planning, and by effective, I mean timely, too.  Last-minute-mania has become what it is, a mania: we all tend to postpone activities, decisions, operations, to the very last minute until there is a point of no return.  That’s no effective way of planning, and effective risk processing requires effective planning, too.  All too often we are told – and shown – of pretended natural disasters: but when one analytically scratches the event’s surface, one soon unveils a human artifact beneath.

What I really mean is that we have to be aware of the risk of running into risks – in the first place.  Peace of mind will come afterwards.

SINGING THE RISK BLUES
Risk & Blues: Have you ever met a salesman who says no to a potential buyer?  If so, mark the date on your agenda.

Sale people are the most risky of all, in any organization.

Salesmen – by the way, is it really coincidental that the words rhyme with ‘sailors’, who are notorious for unkept promises and lure company management with proverbial profits.  God only knows why company managers are so hungry for profits, they drive big black cars, they have good salaries, nice houses and families, but what risks do they face?  Why should they want more and more money?

Product & Process Design & Development:  ‘Here comes the Sun’ Elton John would sing. The Sun that heats, the Sun that burns.  According to what I know – work experience, reading, TV watching, everyday life – the vast majority of accidents, even major accidents, is due to poor design – and development of previous designs. There’s evidence to state that most designers are under-skilled, or money-minded, mainly.

No joke, here, too in Italy, a bad design is a bad design.  When designers don’t investigate the design-related risks well enough, it’s their fault, not the consumers’.

Let’s just think of any device’s ‘use and maintenance instructions’:  if they were written in Chinese language and my mother tongue would be English, I would just understand the same: that is, nothing at all.  I would wonder if the person who writes these leaflets ever uses the device.

A further comment on poor design practices not only concerns home computers.  IT consultants are, together with legal  onsultants, probably the most expensive – for their customers – consultants on the face of planet Earth.  I still often wonder that IT consultants act like hackers, to make their contracts last longer; and that legal consultants just give you advice drop-wise, having in mind the same target.  But, whoever buys their services finds himself or herself at the Upper Risk Control Level, can’t wait anymore, Disaster is knocking at the door.

Once more the equation holds right: poor planning = high risk.

My grandmother – unlike my mother – did not trust any of her suppliers: grocery, bakery, butcher, vegetables, all of them.   She said they give ninety grams to everybody, ninety-five grams to somebody, hundred grams to nobody, but they made everybody pay for the hundred grams. Not to speak of the merchandise’s quality, of course: we don’t want to open Pandora’s box.

Risk Realization Process: it sounds good, doesn’t it?  Yes, esteemed ladies and gentlemen, we produce risk, with all and any capability in our hands.  My friend and editor Taran March says ‘may the Force be with you.’  I rephrase her: “may the risk be with you”.

I am very fond of Zen and non-teleological principles.  If you are familiar enough with them, you’ll discover an ‘upper world’ that will provide you with out-sights, rather than in-sights. I’m no diananetician, I like to feel the ground on which my feet move; and I like to be aware of the probability – alias, risk – that my next step will bring me closer to my home.

The next steps of my risk processing theory tend to make me rather angry.  It goes about measurement and, being myself Latin, therefore very flexible, culture, I feel stressed when I’m measured.

Nevertheless, even if I don’t believe that ‘what is not measured does not exist’, some kind of effective control system on risk processing has to be put in place – not to let us drift away.

I do not mean any shortcut, I only mean ‘common sense’: that’s the resource, the ‘diamond’ we’ve to dig out from our own depths.  Let’s mirror ourselves: technicalities apart, we ‘know’ the risks we incur in; why, therefore, we don’t address them with appropriate corrective and preventive actions?

Are we ‘Homo Sapiens’ or ‘Homo Stupidus’?