Tuesday, 14 April 2009

Six rules about risk (and life)

One of my favourite software writers observes that the quickest way to deliver a project is not to make mistakes. It is good advice (although not that easy to follow), and risk management is part of project and performance management. As many organisations have too graphically illustrated, there is little point in aiming for peak performance if you destroy the very organisation you are trying to manage.

A friend recently sent me Dr Aswath Damodaran’s Six Rules of Risk Management, which I liked a lot. At the considerable risk of getting a reputation for loving lists, here it is:

  1. Where there is an upside there is also a downside
  2. There are no free lunches
  3. There is no risk in the past - study the past but remember risk is in the future
  4. Risk management is everyone’s problem
  5. Plan to be a risk taker - hire the right people
  6. Do everything you want to manage risk, but at the end of the day you also need luck.

An interesting list – I would quibble slightly with 2 and 6 – but no more than quibble. A lunch, at the end of the day is a lunch; losing Barings Bank (or whatever) is a little more serious. And luck is a highly debatable entity, don’t you think?

3 comments:

  1. Luck is a useful approach to doing well. I don't think of it as luck but more of an active way of bumping into opportunity. Nobody ever had any luck by wishing for it.

    Free lunches are rare and not as good as though you pay for!

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  2. Just this morning I was thinking about what luck actually is. I love your definition of it being an active way of bumping into opportunity! Thank you!!

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