FEASIBLE RISK MANAGEMENT FUTURES: MAJESTY, MISERY, OR MELANCHOLY?

by Robert N. Charette

I realize, of course, that predicting the future is a dangerous business. As management theorist Peter Drucker has written, "Forecasting is not a respectable human activity and not worthwhile beyond the shortest of periods" ( Management: Tasks, Responsibilities, Practices). In fact, there is a certain irony in endeavoring to predict the future of risk management given that a basic purpose of risk management itself is trying to predict the future.

Be that as it may, gazing into my crystal ball, I see that there are three basic futures for risk management a decade from now. The first is a future of outward brilliance followed quickly by burnout and turmoil. In this future, which I call the risk management misery scenario, risk management as a discipline generally loses its credibility and falls into broad disrepute.

The second possible future is one that I call the risk management majesty scenario. In this future, risk management is seen as a critical core competency and a factor in attaining and sustaining a competitive edge. The risk management process is well understood, it is taught across all school levels, its practitioners command respect, and generally it is not talked about much as a separate or unique discipline because it is so ingrained within a wide range of organizational cultures. Risk management's value for money is readily accepted, and its limits are recognized and accounted for when assessments are published.

The third future I see for risk management is the risk management melancholy scenario. In this future, risk management continues to operate pretty much as it does today. It still struggles to attain mainstream recognition and acceptance. Its uptake by organizations is modest, with relatively few companies unabashedly embracing it. Trying to compute risk management's ROI will still be a priority, as risk management practitioners continue in their attempt to prove its benefits to senior management. Risk management will neither rise to the superstar status of, say, reengineering in the early 1990s, nor will it be burned in effigy.

Of course, there are other scenarios possible, and you can define different shades of each of the three above. However, these three provide us with a nice bell curve distribution, which is sufficient for our purposes.

--Robert N. Charette, Fellow, Cutter Consortium