Risk Relativity

For a thief, a good security system is a threat. To a security guard, that same system is an opportunity to lessen the risk of robbery and to increase the chance of catching the thieves.

A person’s perspective depends on which side of the fence they are sitting on. With that in mind, a risk can be a threat or an opportunity. It is relative from a point of view. Your business sees a threat and your competitor sees an opportunity. It is as simple as that.

Each individual player within the risk universe will see things a bit differently compared to the next person, with some people interpreting things in exactly the opposite fashion. In each case, the person can see only one set of attributes.

Anyone who contemplate risk should consider that threats also bring with it opportunities and opportunities can also brings threats.

The simplistic objective point of view is that risk is either a threat or an opportunity, depending on the observer’s orientation to the goal. If one sits on his most important goal and look at the potential risk, the resultant or prevailing possible consequence dictates whether it is a threat or an opportunity.

Now, if we could take an even more macroscopic view of the risk universe as an independent observer, we would be able to see risk from more than one perspective and gain a level of understanding that most of us never thought possible before – that risk is both a threat and an opportunity.

These are underlining characteristics that all risk practitioners have to remind themselves always. Have you ever heard the saying, “every cloud has a silver lining”?

In this regard, it is clear that risk is not absolute, but relative.

We can see both possibilities existing simultaneously as we widen our perspective, as we shift our position. When we have no stake in the game ̧ we can relate to both parties’ positions.

If one thinks about it a little deeper, the concept of risk becomes more evident. The risks of threat and opportunity are two sides of the same event. Obviously, events and objectives go hand in hand, as your objectives will depend on how you interpret events.

Using the set theory and imagining risk using a Venn diagram, one might imagine the concept of uncertainty as a big system where risk resides.

Given a singular risk that revolves around a given objective, considering a vast system called uncertainty, the probability of that risk is impossible to measure.

We can calculate the probability of an identified and specific risk because we can appreciate the uncertainty boundary (or field) where the risk lies.

The finite boundary (a small piece of the whole uncertainty system) relevant to the objective is the only useful element in appreciating that risk, a piece of mathematical uncertainty that has practical use.

It is the kind of uncertainty with more reliable probabilistic basis.

We’ve all heard that beauty is in the eye of the beholder, meaning that the perception of beauty is subjective. Similarly, perception of risk is subjective because it is relative. It depends on how one interprets a situation. Duality in this sense points to two kinds of perceptions rather than two intrinsic attributes in one.

Many writers in the last few centuries have touched on the concepts of relativity and subjectivity when talking about how a person sees their surroundings.

About the Author

Rufran C. Frago is the Founder of PM Solution Pro, a Calgary consultingproduct, and training services firm focusing on project and business management solutions. He is passionate providing advice, mentorship, education and training through consultation, collaboration, and what he uniquely calls, student-led training.

BOOKS AUTHORED BY RUFRAN FRAGO

  1. Risk-based Management in the World of Threats and Opportunities: A Project Controls Perspective.ISBN 978-0-9947608-0-7.Canada
  2. Plan to Schedule, Schedule to Plan.ISBN 978-0-9947608-2-1.Canada
  3. How to Create a Good Quality P50 Risk-based Baseline Schedule.ISBN 978-0-9947608-1-4.Canada
  4. Schedule Quantitative Risk Analysis (Traditional Method).ISBN 978-0-9947608-3-8.Canada
  5. RISK, What are you? The Risk Management Poem: Children’s Book for all Professionals.ISBN 978-0-9947608-4-5 (Canada)
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