National Geographic Magazine has always been clever to astonish us with very nice photographs and appealing columns.

National Geographic TV have been focusing on risk:

What I feel lacking in these broadcasts is a proper evaluation of the risks and of their consequences.

As an example, italian NatGeoTV rebroadcast the 1998 Germany’s high velocity train accident – resulting in one hundred casualties, twenty five million Euros reimbursed by the Deutsche Bahn to victims’ families and to injured people plus the cost of stopped railway and of refurbishing railway infrastructure.  All in all, a cost of some fifty million Euros would not be too far from reality – and Heathrow’s new Terminal Five is said to bring airport capacity to one hundred million passengers per year.

The railway is an after-event catastrophic risk analysis.  The latter a risk planning and  opportunity analysis.

The 1998 German train accident is analyzed in terms of what went wrong and of what could – and should – have been done to prevent it.  The root cause seemed to be a bona fide design feature.  Instead of using monolithic wheel structures, the engineers had the wheels built with forged steel rings kept together by means of rubber rings to absorb vibrations better.  Thus making passengers more comfortable when traveling at two hundred kilometers per hour, for a few hours, from Munich to Hamburg.

The Heathrow Terminal Five plans are risk analyzed in terms of what can go wrong.

But we all think more and more in terms of money, that’s becoming more scarce.  And, we are thinking more in terms of more effective and efficient use of the resources we have.

So, what are the costs of risk?

This is a basic question to which we should find an answer.

We’ve first need to distinguish between advanced planning, therefore risk predicting and risk preventing costs, and after-event risk repairing costs.

The former include – among other inputs – setting of objectives, measurable targets, responsibilities and authorities, communication channels, resources, monitoring, controlling and improvement methodologies.

The latter should include the evaluation of costs related to insurance fees, loss of image,  loss of customer trust, internal personnel unrest because when something wrong happens there’s always a voice saying – more or less loudly – “I warned you !”.

The most common trend is still from the Roman Caesars.  More than two millennia ago, the rule was “alea jacta est” or in other words we dedicate the least possible resources to planning, based on our assumptions: 1. We’ve been lucky enough so far, so we don’t see why we should stop being lucky right now and 2. We master what we do, why should we therefore fail this time?

But there’s a lesson we keep forgetting the important fact in Caesar’s story: he was ultimately betrayed.tT

We can be betrayed by our excessive confidence in our own assumptions.   Thus our often superficial planning will show us the truth, which is that it is superficial.

And we shall bear its costs, at a very high risk and price.

I’ve sketched how an effective and efficient planning should be: the AIAG’s APQP (Advanced Product Quality Planning) Manual is very detailed on this matter and is applicable to risk management, too.

How to manage risk consequences or effects is a completely different issue.  Thinking of the Costa Concordia accident and her refurbishment to make her a modern cruise ship cost the ship owner half a billion Euros but her voyage to the Genoa port and her dismantling is going to cost one and a half billion Euros to the ship owner.

Was that kind of  “alea jacta est” approach really worth?

It’s obvious we can’t predict nor prevent everything.  We’re also under time and money pressures to make the right decisions.

We can’t wait too long before playing our game.  We have to take risks.

What’s really looking silly is that we make the most important decision at the possibly worst moment.

An aged lady, a friend of mine, once confessed: “It took me nine years whether to marry him; next time, I’ll take more time.”

There are always lessons that we can learn from life.