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Understanding the Risk Mindset

 

Risk Doctor Briefing

SERIES ARTICLE

Dr David Hillson, PMI Fellow, HonFAPM, FIRM

The Risk Doctor Partnership

United Kingdom

 


 

Attitude affects Action; Belief shapes Behaviour; Culture influences Conduct

We all know that how we think determines what we do. This is particularly true when we are considering how to act towards risk. When we face uncertainty, we’re not always rational. Instead we fall back on deep-seated values and feelings about risk, which can often lead to unexpected results. We react rather than respond, driven by gut-level influences instead of thought-through reasoning.

This can affect us in many different situations, from making high-level strategic investment decisions, through managing projects and programmes, and on into our personal lives (making relationships, bringing up children, choosing a career path, building a pension portfolio, etc.). For example, if our basic view is that risk is bad and must be avoided at all cost, we will be cautious and prefer not to take chances. But if we see risk as exciting and challenging, we may be tempted to take risk unwisely, exposing ourselves to unacceptable outcomes.

Instead of reacting instinctively towards risk, we should cultivate a risk mindset, thinking in a more balanced way about risk. This will allow us to make better decisions whenever we are uncertain. How we think about risk will determine how we try to manage it, and an inaccurate view of risk will lead to ineffective risk management. A risk mindset includes the following values:

  • Risk is natural. Life itself is uncertain, and this translates into every type of human endeavour. The risk mindset accepts this reality and doesn’t struggle to remove all risk from every situation.
  • Risk is manageable. There is always something we can do in response to each risk. Avoid a victim mentality – we are not powerless, as long as we can see risk in advance. The risk mindset always seeks to influence risk, either by tackling its occurrence or addressing its effect.
  • Not all risk is bad. Some uncertainties can be unwelcome if they occur, causing delay, damage or disruption. But other uncertainties would be helpful if they happened, resulting in reduced costs or timescales, or enhanced performance and reputation. The risk mindset remains alert to both threats and opportunities.

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How to cite this paper: Hillson, D. (2020). Understanding the Risk Mindset, Risk Doctor Briefing; PM World Journal, Volume IX, Issue IX, September.   Available online at https://pmworldlibrary.net/wp-content/uploads/2020/09/pmwj97-Sep2020-Hillson-understanding-the-risk-mindset2.pdf

 


 

About the Author


Dr David Hillson HonFAPM PMI-Fellow CFIRM CMgr FCMI

The Risk Doctor
United Kingdom

 

Known globally as The Risk Doctor, David Hillson leads The Risk Doctor Partnership (www.risk-doctor.com), a global consultancy offering specialist risk services across the world.

David has a reputation as an excellent speaker and presenter on risk. His talks blend thought-leadership with practical application, presented in an accessible style that combines clarity with humour, guided by the Risk Doctor motto: “Understand profoundly so you can explain simply”.

He also writes widely on risk, with eleven major books, and over 100 professional papers. He publishes a regular Risk Doctor Briefing blog in seven languages to 10,000 followers, and has over 10,000 subscribers to the RiskDoctorVideo YouTube channel (www.youtube.com/RiskDoctorVideo).

David has advised leaders and organisations in nearly sixty countries around the world on how to create value from risk based on a mature approach to risk management, and his wisdom and insights are in high demand. He has also received many awards for his ground-breaking work in risk management over several decades.

To see other works previously published in the PM World Journal by Dr David Hillson, visit his author showcase at http://pmworldlibrary.net/authors/dr-david-hillson/

 

 

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