You can’t manage risk to zero

The Rutherford Regional Science and Innovation Centre, January 2018

Risk can never be removed completely, but it can be reduced. That’s true in normal operations and remains so during disaster recovery. However, in the aftermath of a major event, most people become increasingly risk averse, just when they are called upon to make crucial decisions in an uncertain environment. This can lead to two things: 

Sticky risk 

The risk may appear more significant than it would during normal business, and it digs in. Decision makers are reluctant to act until they are confident risk is minimised to the greatest extent possible and this can lead to slow responses and missed opportunities. 

Offload fever 

The focus shifts to contracting the burden of risk away from the organisation to external suppliers. But this is not realistic, particularly in an undersupplied recovery market. Some risk must always be carried internally. 

Risk management should be a shared activity – client owned but collaboratively driven – with risk management responsibilities clearly defined in contracts and terms of reference. Consultants, contractors and project governance boards, for example, should all be clear from the outset about which risks they are carrying and the boundaries of their responsibilities.  

One area where this multi-pronged approach had real benefits for us was Quality Assessment. The architect documented flaws and faults, and the list was reviewed by an independent consultant, providing both specialist and impartial assessment of build elements that required improvement to meet an acceptable standard. 

Internally, risk management requires adequate resourcing and staff should be encouraged to provide an open and transparent assessment of risk, rather than attempting to package it up to make it acceptable. 

Hoardings on the Mechanical and Civil Engineering wings, 2016

Remember the big picture 

The disaster environment itself creates significant organisational risk. Survival requires rapid and decisive action, and risky decisions need to be made. While risk cannot be avoided, it needs to be acknowledged and managed. For example, our rebuild strategy avoided the risk of bankruptcy even at the worst-case scenario, but ensuring that affordability meant we had to decline opportunities to expand some facilities.