Risk Assessment

Risk Assessment

 

Martin Pergler shares an article that explores risk appetite and how to address it as we move into phase two of COVID-19. 

Act I of COVID response has been about broad societal measures to stop the pandemic from overwhelming the health system, e.g. physical distancing, pausing the economy, cutting travel; all to slow exponential spread. While Act I isn’t over, it’s increasingly clear a long Act II, balancing reopening and personal freedoms with stubbornly continuing COVID risk, will follow. That’s before Act III, a full-fledged recovery (vaccine? antibody tests? herd immunity?…), can truly start.

For Act II, we need to start having clearer, more nuanced, and non-judgmental discussions about risk appetite. This is a concept from (institutional) risk management, specifying* how much of what type of risk an entity is prepared to take, and under what circumstances, including for what benefit. One of the challenges in risk management is reaching consensus on risk appetite, and reflecting that different individuals and groups in the entity may have different risk appetites. This risk appetite concept is also applicable to individual and societal risk-taking, though less often discussed explicitly. In any case, it’s going to be very important for COVID Act II, and we’re already seeing it rear its head, in ugly, unstructured, politicized fashion.

 

Key points covered include:

  • Objectively different personal risk
  • Different personal risk tolerance
  • Lack of rationality
  • Selfishness vs altruism

 

Read the full article, Getting serious on COVID risk appetite, on LinkedIn.

 

 

Martin Pergler summarizes the assessment of comparative risk levels from two recent press articles and compares them to simple-minded risk assessments to identify the value of the information. 

As we gingerly try to “unfreeze” economic and social activity after this first wave of COVID, there’s a lot of prognostication what formerly normal activities are more or less risky. Two recent U.S. press articles thoughtfully assess comparative risk levels, but also fall into several pretty typical risk assessment traps. What did they do well, what could they have done better? (This article focuses on methodological lessons learned and risk management best practice. Apologies; I have nothing to add as to how risky it truly is to have your hair cut next week!)

The New York Times surveyed several hundred epidemiologists when they expect to feel personally comfortable doing 20 activities. So e.g. only 3% expect to feel comfortable attending a sporting event, concert, or play this summer, 32% in 3-12 months, and 64% in more than a year.

 

Points covered in this article include:

  • Analysis of commentary
  • Assumptions about risk mitigation
  • Risk assessment

 

Read the full article, COVID risk by activity: how to (not) do risk assessment, on LinkedIn.

 

 

Davide Gronchi provides a pragmatic approach to risk mitigation and shares a method he uses that was invented by the US military in the late 1940s: FMEA (Failure Mode and Effects Analysis) to assess risk under three lenses. 

Whilst in the middle of a heavy and unexpected crisis, company leaders are requested to keep looking far ahead and shape the future of their company by (re-)designing the strategy and how to implement it.

Current times are full of worries and threads, every day are more negative than positive news that capture our attention. How to concentrate on our business, sailing in calm waters and heading to a bright future? Yes, company leaders must keep this attitude! Nobody else can do this, it cannot be delegated. And recent research proves that CEOs like crafting strategy more than other tasks they are responsible for!

Nevertheless, we are all prone to see risks everywhere now during the COVID-19 crisis. This was a risk that nobody was really ready to mitigate. Nobody actually ever thought it could ever be real!

In our life of leaders, in our companies, many can be the risks that we might face and that need to be considered and need a mitigation plan. How to identify and prioritize risks?

 

The lenses for risk explained in this article include:

  • Severity
  • Occurrence
  • Detection

 

Read the full article, The Pragmatic Way for Risk Mitigation, on LinkedIn.