Unpredictability=Risk?

Human behavior is complex and unpredictable. Although we claim that logic is the prime driver of actions, in 80% (am I quoting a low percentage?) emotions drive human behavior. Emotions again are positive and negative, and it is the negative ones which cause most grief. Warren Buffet aptly described it when he said:

“The fact that people are full of greed, fear, or folly is predictable. The sequence is not predictable.”

If we study in detail, the unpredictability of negative human behavior causes the maximum risks. HP CEO Mark Hurd lost his job for submitting fraudulent bills for dinner dates. With his kind of salary and perks he could very well afford to pay his dinner bills. Logically, we will find no explanation for his desire to fudge the bills.

While conducting risk management, we focus on controls but not on the unpredictability of negative human behavior which is the root cause of damage and destruction.

Should we not be concentrating more on studying human psychology for enabling risk management? Welcome your thoughts on it.

Advertisements