In risk and compliance, we often assess the likelihood of significant events that could harm employees or damage facilities. Imagine evaluating such risks at two of your plants. At one location, the probability of an incident is high, while at the other, it's low but not zero.
Choosing inaction is essentially gambling. As a responsible owner, you decide to implement measures to address the high-probability risk, hoping for the best with the other.
However, uncertainty is a ruthless master that disregards our hopes and wishes.
The challenge with probabilities, especially when dealing with certain types of uncertainty, is their limited ability to predict actual outcomes.
Consider flipping a coin: you know the probability of getting heads or tails is 50% each, but for any particular flip, you can't predict with certainty which it will be. Similarly, in risk assessment, you may know an event is possible, or even its frequency, but pinpointing exactly when it might occur remains elusive.
The next day, you wake to discover that the other plant has experienced the risk event you feared. You're surprised by its occurrence given that probability was low. However, as humans, we often conflate low probability with impossibility, but uncertainty doesn't operate on our assumptions.
In reality, low-probability events can and do happen. Just as a fair coin can land on tails several times in a row despite the 50% probability, uncertainty doesn't discriminate based on our perceptions or desires.
This serves as a stark reminder that in risk management, we must remain vigilant and proactive, regardless of perceived probabilities. Failing to address potential risks, even those deemed unlikely, can lead to unexpected and potentially catastrophic consequences.