Taking Occam’s Razor to risk management

The principle of Occam’s Razor is that if there are two equally likely solutions to a problem, we should then choose the simplest. Grant Purdy has recently published an article suggesting that to be effective we should only describe the process for managing risk in terms of the way people make decisions, and interpret the ‘framework’ for managing risk in terms of elements that are normally found in an organisation’s system of management.

The article was accepted by the Institute of Risk Management in the UK and appeared in the Spring edition of the Risk Management Professional.

The article makes the point that organisations and the people who work in them need simple, practical advice on how they should deal with the uncertainty they face in pursuing their objectives. If ISO 31000 and any future revisions continue to express the fundamentals correctly, in a way that is coherent and understandable, then there should be no need for further amplification, perturbation or the continual re-invention and embellishment we see now in the risk management market.

Grant’s article stresses that risk management should only ever be a servant of the organization. Its role is to help the organisation achieve its objectives by supporting reliable and coherent decision making that is fully aware of sources of uncertainty and how these should be dealt with. The risk management process does not make decisions, people do.

He concludes that organisations wishing to improve the integrity of their decisions should build upon their existing systems and processes, adapting them in the manner suggested here so that the risk management process becomes fully and appropriately absorbed.

The content of the article was also covered by a presentation at a conference in Toronto made jointly by Grant Purdy and Professor John Shortreed of the Institute of Risk Research.

You can read the article here

The paper from Risk Management Professional.