Risk Management

Abstract

Every potential decision we make is fraught with a variety of risks, and the decision to not act at all is frequently the most dangerous. In complex and dynamic environments there are huge volumes of decisions that must be made at each moment, with the number of potential responses, or lack thereof, limited only by the imagination of those facing the choice. The very success of an operation depends largely on one’s ability to properly assess these risks, yet without an understanding of the methods available to accurately identify and measure those risks inherent in each potential response, a person is just guessing at which will have the best outcome, or whether a response will even be successful. In the best of circumstances, such haphazard methods of managing operations will result in less than optimal decisions that create inefficiencies, but when you include important resources, the success of an operation, or even the lives of people in the decision you make, the accuracy with which you manage risk could literally be a matter of life and death. By applying statistical measures already discussed throughout many earlier chapters to a given operating environment and the resources that will be utilized within that environment, though, it becomes possible to turn these risks into a potent strategic advantage by managing the exposure of each side of a conflict to these risks, and by being able to improve one’s response and assessments of strength after encountering a risky situation.