An Appetite for Risk

Risk is the biggest meal of all when it comes to incident management. As each stage of the planning, preparedness, response and recovery cycle blends into the next, we focus on risk; undertaking analyses, developing matrices and discussing mitigation strategies. We even refer to an Incident Controller’s ability to accept a level of risk as their “Risk Appetite”.

Some ICs will have a high risk appetite. They’ll be more confident in taking on the unknown in the pursuit of achieving the end goal or objective. Usually their strategies are overarching, not as detail oriented, with a focus on what can be accomplished and the benefit it will have to the bigger picture.

For those ICs with a lower risk appetite, they’ll seem to be more conservative, focusing more on what could potentially hinder the operation, mitigating challenges along the way and making sure the smaller tasks are effective. They’ll want to confirm the security of the resources and know that something is complete, rather than believing it to be.

To say that someone has either a high or low risk appetite is rather restrictive though. I doubt anyone is either one or the other at all times. Perhaps it’s better to look at someone’s risk appetite through a gradual spectrum?

Her Majesty’s Treasury Department in the UK wrote a paper called “Thinking about risk – Managing your risk appetite; A practitioners guide“. In it, they define five levels of risk appetite – Adverse, Limited, Cautious, Open and Hungry. Having a wider range to describe our appetite for risk allows for a movement between levels, taking into consideration the circumstance and situation. You can read more on the descriptions of each level on page 12 of the document at:

Click to access tar_practitioners_guide.pdf

Leadership Challenge Activity
At your next team meeting, using a list of different scenarios, situations or jobs you have been involved in managing, ask small groups to discuss potential options for solutions and agree to a level of risk they would feel comfortable with. Use the five levels in the HM Treasury’s paper to help categorise the potential solutions. Discuss as a group why there are differences of opinion.

*Image Source: Getty Images via The Motley Fool.

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