Skepticism is an excellent tool in managing risk, but
it must be moderated or people become jaded and cynical. This increases risk and
is corrosive on morale and productivity.
The antidote to skepticism is trust.Trust is the assurance, confidence or dependence that you have in someone
or something, now and in the future. Ultimately, it is a relationship between
two or more people.
Although seemingly intangible, trust, and the breach of that trust, have
enormous social and economic value.Trust
allows us to save time, money and effort that would otherwise be needed to
verify every aspect affecting our lives. Imagine the economic impact if we all
had to check every transaction in our lives - matters as routine as building
codes, potable water, etc.Witness
also the cost of deadly breaches of that trust. The average settlement in
168 cases of wrongful death for the victims of the recent TWA 800 and SwissAir
111 tragedies was $5,952,380 US.The
insurance industry estimates wrongful death settlements to grow almost
exponentially in the future.
Of course, no sum of
money can ever compensate for the loss of a human life, especially for the
victim.In a
trust relationship, both parties have much to lose, and both have duties of
care.There are many temptations
and opportunities for trust holders to take advantage of unknowledgeable clients.
This is all the more reason for both parties to manage their risks assiduously.Disclosure and the truth must be a common starting point.For those who put their lives or their assets in the trust of others,
ignorance invites disaster. Unless you are certain of the facts or the trust,
you are at risk.With the
complexity of modern life and the difficulty of finding facts, uncertainty is a
given.If that risk is critical or
catastrophic, due diligence is required on your part. Insist on an independent
and competent assessment - even the watchdogs need watching.
In sum, the concept of public and individual trust is
so fundamental to society that it must be protected by multi-layered defences,
beginning with moderate skepticism, followed by effective preventive measures
and ending with verification.We’ll
cover those measures in upcoming issues of MYPR.
Recommended Reading for Risk
Managers
Social
Trust and the Management of Riskedited
by George Cvetkovich and Ragnar Löfstedt. This fine compilation of a dozen
papers from Europe and the US focuses mostly on the social impact of trust.
It offers many useful insights for decision makers in the public, private and
voluntary sectors.
Trust:
The Social Virtues and the Creation of Prosperity, by Francis Fukuyama.Trust is the glue that holds the economy and civilization together, says
this senior social scientist at the RAND Corporation. Elegant, scholarly, at
times controversial, this highly readable book focuses more on the economic
impact of trust.
One page, once a month. Also available by fax or e-mail.
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Mike
Murphy has been a risk management consultant for the last four years. Prior
to that, he spent 17 years (78-96) with Transport Canada, his last five as Regional
Director General, Aviation
in Winnipeg. Originally trained as a professional pilot, he is the
author of an internationally acclaimed 500-page report entitled "An
Evaluation of Emergency Response Services at Airports in Canada,"
currently in its second revised edition (August 1999) and is undergoing
a thirdmajor
revision. He is also the
Chairman of the Air Passenger Safety Group (APSG) www.transport2000.ca/APSG
, a Director of Transport
2000 Canada www.transport2000.ca,
a Director of the Ottawa Chapter of Christian Businessmen's
Committee (CBMC) www.cbmc.net and the Secretary General of the Peugeot Club of North
America (PCNA). www.peugeotclub.org
This,
gentle readers, marks our second year of publishing MYPR.We hope it has provided stimulated reading over the last year.Critical thinking is a prerequisite to managing risk.Your comments and suggestions are always welcome.
Managing Your