“I am quite positive that, in reality, everything is going downhill fast”

This sentence popped into my head the other day and it got me thinking. We are pulled in many different directions; sometimes positive, sometimes negative and sometimes it just is what it is. Balancing these three states is something every risk manager must do. Too much of a negative attitude and nothing will get done. As one CEO said to me after firing his Chief Credit Officer, “the problem was they didn’t know how to say yes”. And counter that with the mantra at the now defunct Washington Mutual and its motto, “The Power of Yes!” In their case, all the loans they made were good and would be repaid. It just depended on how you presented the ability to repay information.

As we head toward year-end without a clearly identified path out of the current pandemic and its economic impact, the messaging we are all exposed to will continue to try to push us towards the outer bounds of our emotions. Especially when it comes to disinformation and rumors. The result of this could take us to a state of either paralysis or delusion and so it is important to strive towards balance.

I find myself being pulled in these many directions and so I have developed a set of guidelines to help me try to stay within the guardrails. The rules are;

  • Reality is what is happening right now and is interpreted by what has happened in the past. The emotional interpretation of reality sets the base for my own optimism or pessimism.
  • Optimism and pessimism are emotional interpretations of the future and are based on what we have experienced, studied (and comprehended) or analyzed. Since it is about the future and something I can’t predict, my feelings may be right or wrong. So I need to understand my feelings and be able to adjust my emotional state as the future turns into reality.
  • Panic sets in when an event occurs that we haven’t thought about (or even considered) or have thought about and concluded the absolute best or worst will happen. This takes us to the extremes of being optimistic or pessimistic. Extremes are rarely good and so should be avoided as much as possible.



– The Hitchhikers Guide to the Galaxy 

Some people refer to this as; known knowns, known unknowns and unknown unknowns. There are many other ways to think about this and you should decide what works best for you.

I call this my Personal Risk Management Framework. I guess my risk management roots are showing with this name. It is something that I have come to over the last several months as I have transitioned to a temporary (hopefully) homebody from someone who has averaged over 100,000 miles of flying per year for the last 20 plus years. I began to formulate the components when I tried to unsuccessfully apply the risk approaches we use when consulting with businesses and other entities. All I can say is, try applying COSO or ISO 31000 to your personal life. It is neither easy nor particularly applicable. At least it wasn’t for me.

My framework gained form and functionality as I tried to absorb the information being thrown at me and as I tried to discuss the concept of risk mitigation with my family. You see, we welcomed a grandchild into the world in March and had to understand the risk measures at the hospital (no guests or visitors) as well as the impact of the virus on the old and the young. As someone grounded in risk management, I looked along the lines of risk mitigation…only to realize those in my “bubble” were thinking along the lines of risk avoidance. And believe me, when I tried to have that discussion with my spouse and the others in my “bubble”, it did not go well. I was feeling, well, ganged up on. And for good reason. My attempt at analysis was not taking into account the knowledge of others (including a health professional) and the emotions that were being felt; including my own. I can remember in June stating that I would probably be getting back on a plane soon, of course using risk mitigation techniques, and the justified backlash from that pronouncement. I was trying to give myself some optimism and show my bravery against a foe that has a single mission which is carried out efficiently and with no emotions.

The interesting thing is that I may well have travelled and never caught the virus. I had travelled quite heavily up through the middle of March, going to places where outbreaks were occurring such as Denver, Chicago, New York City and Miami. It is possible I could have kept travelling and by practicing risk mitigation (facemasks, hand washing, social distancing, etc.) I might not have been infected. But the consequence of not practicing risk avoidance would have been not being able to see my family or play with my grandchildren. The strategy was also flawed in that I was only thinking of myself and not of the impact an infection would have had on others. Fortunately I have a caring family that convinced me to practice risk avoidance. My travel schedule, along with many others, ground to a halt.

This personal framework has led me to the following thoughts; the reality of the situation is that we are still in the middle of a pandemic which is not going to go away in the near future. More is known about how to be safe and how to treat those who are infected but it is still deadly and not under control. We are receiving good and helpful information but there is a significant amount of disinformation that presents a personal appeal (reinforcing what we want to happen) to those who are unwilling to listen to many sources. Accepting the reality of the situation leads me to a view of the future that has more pessimistic characteristics then optimistic ones. And so I will continue with the risk avoidance approach until optimistic characteristics outweigh the pessimistic ones, at which time I can move to risk mitigation.

A few final thoughts. You may notice that I use the first person personal pronoun throughout this missive. That is because I believe that risk is a personal judgment process. Everyone self-assesses the risks they face and it takes dialogue and discussion to reach a unified view of risk. But underlying the unified view is our personal one, which is shaped by who we are, what we have experienced and what we have learned. This does not take away from the fact that I am extremely grateful to be able to work remotely and that there are many people who are putting themselves at risk in order to make certain we can continue eating, something many others are struggling with because they have lost their jobs and a means of earning a living.

And finally, I leave you with an uncommented on quote from the movie, Lemony Snicket’s A Series of Unfortunate Events,

“The movie you are about to see is extremely unpleasant. If you wish to see a film about a happy little elf, I’m sure there is still plenty of seating in theatre number two. However, if you like stories about clever and reasonably attractive orphans, suspicious fires, carnivorous leeches, Italian food and secret organizations, then stay as I retrace each and every one of the Baudelaire children’s woeful steps. My name is Lemony Snicket and it is my sad duty to document this tale”.


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