April 2005 - Risk Management Misuse Is Out of Hand

By Anthony J. Lockwood

Once was that fiduciary folk used risk management as a tool to help decide credit worthiness, safety issues, and if some business scheme was worth nurturing. Now, pinheads everywhere seize the rubric “risk management” to legitimize harebrained substitutes for common sense and to block innovation. The bad effects of this is spread over us like a plague. 

Example: Between flights, I had a long layover at the Cincinnati, Ohio, airport in Kentucky. I wandered into a saloon to get a snort. I was carded.

Then, I witnessed a 16-year-old kid at a convenience store demand proof of age from some 900-year-old woman wanting to buy cigarettes.

And most of you know the joy of airport risk management. Even before 9/11 I was pulled off security lines for sniffing. I now attract attention going through the magnetometer—without setting off an alarm—while the guy in the tutu and Nixon mask gets waved through. (My wife insists I issue plumes of antiauthority pheromones.)

All this demanding of papers for trivial purchases and dehumanizing airline passengers has justifications, some good, many stupid. And apologists are quick to say that it’s just a little annoying and doesn’t cost much.

No. It’s very annoying and especially costly for manufacturing.

Manufacturing’s style of mismanaged risk management holds everything good suspicious. It’s afraid of foresight,  inventiveness, dreamers, doubters, and anybody or thing challenging conformity. You know, thinking engineers or new processes? They could be dangerous, or worse—costly. This attitude breeds fear and, like a mouse cornered, systemic paralysis.

The costs are huge; the greatest being that acquiescing to lunacy changes our behavior. Like Pavlov’s dogs, we train ourselves to submit meekly to patent-pending stupidity so that we can have our drink,  please Sir. We play it safe rather than rock the boat.

Such docility has become a habit so ingrained in our daily work lives that it’s barely seen. It manifests itself when we design stuff more to shut up the boss than to excite the market. Or when we self-censor a wild idea because we fear it won’t yield an immediate or big return on investment.

Docility manifests itself when we reuse or cling to tired, old technologies rather than dare gamble on the new and bold. It manifests itself when we fail to speak up when the braintrust deludes itself or when we dismiss the dissenter as a nuisance without ever assimilating the opinion voiced.

Risk management was once a prudent policy to forecast and manage the uncertainties of conquering the unknown. Now it’s mostly a misused term for policies that sow uncertainty, codify inaction, and “save” HQ dinero.

Mismanaged risk management is management by Chicken Little cranked up on coffee and steroids. If we remain as silent as lambs in response to this scourge, we are complicit in the fleecing of our souls and in the continued strangling of innovation.

Thanks, Pal.—Lockwood

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