Whenever I take my dog for a walk, there is risk of an untoward event. Perhaps I’ll trip and fall (Rex does love to be underfoot), perhaps Rex will eat something revolting and get sick. Perhaps we’ll be hit by an asteroid. But there is also a reward – Rex will be happy (and I enjoy seeing him happy). We will both get some much needed exercise and fresh air.

It’s unlikely that I’ll spend time and energy understanding it at this level, but there is an assessment that happens. If there was no upside, would I ever bother taking him out? If it was highly likely that we would be killed or injured every time we stepped out the gate, we’d probably have come up with some other activity.

Every endeavour (not just dog-walking) has both risk and reward. This combination is an important concept – too often risk management is misinterpreted as something that imposes constraint, rather than opportunity. Many of us manage risk on a broader scale, on a daily basis. In many cases this responsibility has broader legal ramifications – as with directors of listed companies in Australia. The largest opportunities are often offset with the most complex risks – and that’s the fun!

To actively manage risk is to:

• actively and continuously discover untoward events (risks)
• triage, that is, quickly estimate and prioritise the risks you discover, to allow you to take a risk-based approach to risk
• understand the potential impact of untoward events that could occur as a result of taking a particular course of action. Then reassess your estimates and priorities.
• consider what could be done to minimise these impacts, either through reducing the likelihood that an event happen, or reducing the fall-out of that event happening
• weigh the potential impact and any cost of minimisation, against the upside of the activities that lead to the risk occurring, and decide whether to proceed and how to proceed, based on the comparison between the two
• continue the process to monitor the health of whatever it is that you’re doing