Risk is something we live with everyday. It is part of our being alive. Every living thing has expectations. And when it acts on those expectations, it risks error, because nothing living is infallible. Any one of our expectations may be wrong at any time. None of us is so wise, or so favored, or so skilled, or so wealthy, or so lucky, that we can avoid error and the risk of it.
Since the 21st century began, the top executives of Enron, Lucent, Arthur Andersen, Lehman Brothers, and Bears Stearns realized to their lasting regret, that they risked, and suffered, consequences they never imagined were a real possibility at the time they made the various decisions that destroyed or severely damaged their companies. The “Neo-Cons”, both in the Bush administration and outside it, urged the US intervention in Iraq, and provided estimates of its likely costs initially ranging from zero to $1.7 Billion in testimony to Congress. Estimated costs are over $2 Trillion now, and are projected to rise to $4 Trillion, and there is no end in sight of either these, Iraqi or Alliance casualties, or the growth of anti-Americanism and terrorist recruitment in the Muslim world resulting from the intervention.
Recent history, prior to the crash of 2008 is about people taking risks they did not know they were taking, and losing out, indeed losing big. In business, all eyes are focused on risk, and risk assessment and risk management are more important than they have ever been. Now the world economy hangs in the balance as the financial sector continues to engage in risky behavior after legislatures in nation after nation failed to enact legislation sufficient to remove the derivatives market and other risky and fraudulent practices from the financial landscape. And all this is why a conversational overview on risk and how to reduce it, such as this one, is needed so badly right now.
There are a lot of technical books in the market on risk and risk management emphasizing formal and financial approaches to risk, but I don’t know of any works that focus on the risk of error in decision models in language that people will be able to both read quickly and easily assimilate. This is a short book, roughly 30,000 words, and it is quick and inexpensive reading for the trade market of books on business and other forms of organization.
-- How can decision makers reduce risk?
-- How can they recognize when they have problems of unanticipated risks in their decision models?
-- How can they tell whether they’ve accurately assessed risk and whether decisions they are thinking about have high risks?
-- How can they prioritize risks?
-- How can they create processes and systems that will help them to reduce risks?
-- How can they assess the ability of their organizations relative to their competition to solve problems in alternative areas of risk they are considering entering?
Why is reducing the risk of error by killing your worst ideas a hard thing to do?
The goal of Riskonomics: Reducing Risk by Killing Your Worst Ideas is to answer these questions in a way that can be easily understood and acted upon. It tells people how to reduce risk, particularly in business, by using both creative learning and critical thinking.
This book is for everyone who makes decisions. It explains how an organization can learn how to reduce risk in its decision making by taking the approach of surfacing problems, creating new decision models, and killing its worst ideas through critical exchange. It provides, in a book short enough for an airline flight, both a new approach and practical advice for Business, Government, Non-profit, Non-Governmental, and Supranational organizations about how to reduce risk in decision making; and a general approach to reducing risk in everyday life.