risk mitigation

Blind spots and the way we think

If memory serves me correctly, Bill Gates once said that humans are prone to overestimating how quickly something will happen (timing proximity), but underestimating the impact when it does happen.

Meanwhile, Thomas Schelling, a Nobel-prize winning economist, said ‘there is a tendency in our planning, to confuse the unfamiliar with the improbable. The contingency we have not considered seriously looks strange; what looks strange is thought improbable; what is improbable need not be considered seriously.’ In short, we are prone to confusing familiarity with probability.

Combining these two observations, it’s possible to create a simple matrix with familiarity and probability as the columns and timing proximity and impact as the rows. The combination of probability and impact is of course the well understood concept of risk.

In the matrix, the diagonally opposite quadrant to probability/impact is interesting – comparing familiarity with timing proximity. Arguably, this concerns flexibility – familiarity & timing proximity fostering preference, preference fostering choice and choice fostering flexibility. Then, if comparing short-term timing proximity with tangible familiarity, that’s a strong candidate for improving flexibility to cope (with a situation). However, if comparing long-term timing proximity with tangible familiarity, or short-term timing proximity with intangible familiarity, those are less strong candidates for improving the flexibility to cope.

Perhaps Schelling’s observation is valid is because we sometimes unconsciously confuse flexibility and risk? To recap, the variables of familiarity and timing proximity are reinforcing on flexibility. The variables of probability and impact are also reinforcing on risk. However, although risk can be managed by introducing greater flexibility (buying options, increasing the range, increasing the versatility or other performance improvements etc), other ways to mitigate risk are just as valid and some risks can be mitigated by decreasing the flexibility (road holding performance and car suspension or improving innovation through specialisation etc).

In conclusion, given all of our unique personalities and the complexities of how our brains work (or don’t work), I guess it’s less about solving the riddle and more about being ever watchful for the ‘sirens luring us onto the rocks, at any opportunity’.

Adaptation versus Mitigation

Adaptation and Mitigation can be viewed as alternative generic solutions to a problem. That said, it’s possible and may be appropriate to adopt both to solve the problem.

What is the difference between them? From Wikipedia, ‘an adaptation, also called an adaptive trait, in biology is a trait with a current functional role in the life history of an organism that is maintained and evolved by means of natural selection. Adaptation refers to both the current state of being adapted and to the dynamic evolutionary process that leads to the adaptation. Adaptations contribute to the fitness and survival of individuals. Organisms face a succession of environmental challenges as they grow and develop and are equipped with an adaptive plasticity as the phenotype of traits develop in response to the imposed conditions.’

This suggests theme of flexibility and response-relevance. Arguably, the word organisation could be substituted for the words individual & organism in the above definition. For example, a coral reef or company. Also arguably, adaptation is more strongly linked to reaction and exploitation of opportunity, than initiating change per se.

Meanwhile, from Wikipedia, ‘risk mitigation, involves prioritizing, evaluating, and implementing the appropriate risk-reducing controls recommended from the risk assessment process. Because the elimination of all risk is usually impractical or close to impossible, it is the responsibility of senior management and functional and business managers to use the least-cost approach and implement the most appropriate controls to decrease mission risk to an acceptable level, with minimal adverse impact on the organization’s resources and mission.’

Arguably mitigation is linked to countering the adverse impacts of expected change, being pro-active and perhaps seeking unity and uniformity rather than differentiation (see examples below).

So do these labels help when thinking about various every day issues we face as citizens and voters? Here are four ongoing issues to consider, in no particular order.

Global Warming
Advocacy groups including charities, lobby groups, some politicians and companies might suggest that the only viable solution is to adapt to the impacts of future global warming – mitigation (although attractive) is hard when we don’t understand the climate complexities and/or cannot gain political consensus on which mitigations should take place by which groups. Meanwhile, mitigation groups might promote ‘green solutions’, even while the understanding of global warming complexity is incomplete. Meanwhile, politicians such as Al Gore believe we should pursue both adaptation and mitigation simultaneously (that neither adaptation nor mitigation is the answer by itself).

Immigration and tourism
Adaptation advocates might promote a country investing in its housing and transport infrastructure more rapidly to cope with changes in the number of immigrants and/or inbound tourists. Mitigation advocates might argue for offsetting emigration (including repatriation of foreign-born convicted criminals to their home country), tightening of limited-stay visas and perhaps harmonisation of tax systems, pension and workplace systems across a wider group of countries. Like for global warming, a case could be made that both adaptation and mitigation should be pursued simultaneously.

Adaptation advocates might promote letting waiting lines at hospitals lengthen by default, adapting to cope with demand from health tourists (arriving from other countries for planned or unexpected healthcare in the country visited) and perhaps rationalising the number of healthcare centres, where some cannot survive financially. Mitigation advocates might argue for more investment in preventative healthcare & healthy lifestyles, patient empowerment (to administer their own healthcare, once shown what to do by regulated healthcare professionals), faster diagnosis and less invasive procedures, more walk in clinics and less healthcare errors (sewing up patients with foreign objects accidently left inside them), or accidently doing the wrong operations on the patient. A case could be made that both adaptation and mitigation should be pursued simultaneously.

Higher Education
Adaptation advocates might promote increasing student fees if government funding is in decline and/or reprioritising investment to reflect well in widely publicised research and teaching ‘league tables’. Mitigation advocates might broaden the university course-base, build/refurbish student halls of residence & university buildings, invest in e-Learning channels, teach more post-graduate courses, promote life-long learning and offer suitable short courses to meet expected demand. As above, case could be made that both adaptation and mitigation should be pursued simultaneously.

From the above, perhaps the main message is that if you hear of a proposal, to then identify if it’s an adaptation or mitigation-type approach. Is the proposal necessary and sufficient? Will the right balance be achieved? As a citizen and voter, handle with care…