Are You Stuck in The Risk Paralysis Trap™?

July 2018 Feature Article

By Diana Del Bel Belluz, M.A.Sc., P.Eng.

Welcome to the first issue of my new publication, The Mobilize for Growth™ Advisory.

What is the Risk Paralysis Trap™?

Based on my experience working with hundreds of business leaders over the past 28 years, I've learned that executives and their teams do not achieve their full potential when they see risk primarily as a problem to be eliminated.

July 2018 Advisory

This distorted perception makes them overly risk averse and they become paralyzed and unable to fully utilize their people and resources.  As a result, they miss out on important growth opportunities, they waste time and money, they suffer unnecessary stress and worry, and they fail to achieve their objectives.  We call this The Risk Paralysis Trap™. 

How to spot The Risk Paralysis Trap

Amber Light ImageI often use the analogy of the "amber light decision" to explain how we make a calculated risk decision. If you approach a traffic light and it is either red or green, your decision on how to proceed is a no-brainer.  But, when you approach an amber light, you have a judgment call to make on whether you will opt to stop or proceed through the intersection. You must make a calculation of whether the potential risks and opportunities of stepping on the brake outweigh the risks and opportunities of stepping on the accelerator. Business decisions that have an element of risk are like the amber light decision because they involve:

  • DISCRETION:  There are multiple decision options/potential courses of action, e.g., coast, brake or accelerate at an amber light.
  • UNCERTAINTY:  The exact outcome(s) of each decision option cannot be known in advance, but can be estimated/forecasted.  (None of us can predict the future!). For example, if at an amber light, we opt to brake, will the driver behind us rear-end us?  Or if we choose to coast or accelerate, will we be broadsided by a car travelling in the perpendicular direction? We need to calculate the odds, i.e., quantify the uncertainty.
  • TRADEOFFS: Each option has a different mix of potential upsides (gains) and downsides (losses), you need to choose the 'best' one.  For example, if you are late for an important appointment, you may opt to accelerate. If instead you have your teenager who is learning to drive is in the car, you may opt to brake in order to give them an example of cautious driving.

We make decisions involving risk everyday as we pursue our objectives.  If a decision has the above three characterisitcs, it's better to manage risk more as an opportunity than a problem.

How to overcome The Risk Paralysis Trap™.

To avoid The Risk Paralysis Trap™ leaders need to manage risk primarily as an opportunity.  This means mastering the handling of three essential elements of decision-making under uncertainty, i.e.:

  1. getting clarity about decision outcomes and both the pros and cons (i.e., opportunities and risks) associated with each decision option,
  2. gathering objective information to make a well-informed decision that minimizes bias in your assessment of the uncertainties,
  3. consistently applying the company's guiding values to decisions.  This requires having an understanding of your firm's appetite for growth and tolerance for risk.

Figure 1 shows how the above essential capabilities form The Mobilize for Growth Model™.

When you learn to see risk primarily as an opportunity, the tendency to risk aversion is tempered and you can more fully mobilize your people and resources.  As result, you will optimize your time and money.  You will feel more confident and empowered.  And you will be in a stronger position to achieve your objectives.

Figure 1:  The Mobilize for Growth Model™

July 23 Advisory Figure 1

In future Advisory issues we'll share strategies you can use to avoid The Risk Paralysis Trap™ by enhancing your company's practices for decision-making under uncertainty.

In the meantime, check out the Risk Management and Quantification Virtual Learning Lab (described in the "Upcoming Events" section below) offered by NavIncerta.   It covers techniques that have evolved from applications in companies like Shell and Maersk to provide more robust Objective Information (element #2 in The Mobilize for Growth Model™) to decisions about investments to generate growth. 

 The Risk Wise bottom line...

Viewing risk primarily as 'a problem to be eliminated' leads to an overly risk averse mindset that paralyzes people and causes organizations to underperform.

To avoid The Risk Paralysis Trap™, you need to get better at managing risk as an opportunity.  This will enable you to fully mobilize your people for growth.

To explore how you can improve the quality of your organization's decision-making under uncertainty, contact Diana Del Bel Belluz at This email address is being protected from spambots. You need JavaScript enabled to view it.  or (416) 214-7598.

Access Past Issues of the Advisory

View the Article Index to access back issues of the Risk Management Made Simple Advisory. 

Current Special Offers for Subscribers

Current Special Offers for Subscribers

The codes to access the following special offers have been emailed to The Mobilize for Growth™ Advisory subscribers:

  • SPECIAL INTRODUCTORY OFFER:  Free registration ($145 value) for Virtual Learning Bites in April.  There is a maximum of 10 spots per course, available free of charge on a first come, first served basis (April 1 - 30, 2019).  Two risk quantification Virtual Learning Bites from NavIncerta on the Italian Flag technique and on the Range Assessment technique.  (Subscribers have been sent the instructions on how to access this offer).  Not yet a subscriber?  Don't miss out, click here to sign-up for your complimentary Advisory subscription.
  • SPECIAL OFFER: $200 off the full fee for The Mobilize for Growth™ Advisory subscribers on NavIncerta's Virtual Learning Lab on Risk Management and Quantification (April 1 - June 28, 2019).  (Subscribers have been sent the instructions on how to access this offer).  Not yet a subscriber?  Don't miss out, click here to sign-up for your complimentary Advisory subscription.

  • SPECIAL OFFER: $500 off the full fee for The Mobilize for Growth™ Advisory subscribers on Module 1 of the Masters Certificate in Risk Management and Business Performance Leadership presented by the Schulich School of Business Executive Education Centre (April 29 - May 3, 2019).  Subscribers have been sent the instructions on how to access this offer).  Not yet a subscriber?  Don't miss out, click here to sign-up for your complimentary Advisory subscription.

Not yet a subscriber, but want to access these special offers?

When you subscribe to the Advisory, we'll send you the code for all current special offers along with a link to your New Subscriber Bonus, a copy of Moving Beyond the Risk Map to Operational Vigilance.

FIND OUT FOR YOURSELF why risk management leaders subscribe, click to access the ARTICLE INDEX of all past issues of the Risk Management Made Simple Advisory.

"I save and study each issue of the Advisory. I appreciate how Diana gives very practical advice and links it to fundamental theories and best practices." 

Sherrie Hyde, Risk Manager, Lutherwood


Moving Beyond the Risk Map to Operational Vigilance

Read more about the Risk Management Made Simple Advisory.

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Director, Risk
Kinross Gold Corporation

Diana's Pick

The Neuroscience of Enterprise Risk Management (written by Diana Del Bel Belluz of Risk Wise) expores findings from the field of neuroscience and shares practical tips on how to apply them to enhance individuals' risk management thinking and implement brain-friendly ERM practices in organizations.

The article was published by The Conference Board of Canada in the Autumn 2017 issue of the journal Risk Watch.