The Language of ‘Risk’
One of the interesting points to come out of the recent R2A event and discussions with colleagues afterwards, is the confusion regarding the meaning of the word ‘risk’. There was a general perception that much of the SFAIRP – ALARP debate was confusion of terms rather than concepts, a proposition with which we at R2A concur. This also flowed onto a general observation about the way in which courts interpret various terms, especially the meaning of ‘likely’.
What has Risk Management become?
The meaning of the word risk has changed substantially over the last 20 years or so. It used to refer to potentially catastrophic events for which insurance was normally purchased, a meaning, which is still used by the Factory Mutuals and Lloyds underwriters.
In more recent times it has become associated with the term management, which has morphed it from the consideration of potentially catastrophic events to a process, which determines the optimum risk (upside and downside) outcomes, epitomised by the concept of risk appetite.
The courts have never experienced this confusion. After all, they do not care how often something has gone well, they only examine the instances where it all went terribly wrong. And to deal with these, the courts use the legal concept of due diligence.