The wisdom of managing known risks
Risk Principle(s): Known vs. Unknown Risks; Reactive Solutions
Key Lessons: Sometimes it’s wiser to accept minor, understood risks than introduce new, uncertain ones through hasty intervention.
In the rich tapestry of ancient folklore, certain tales transcend mere entertainment, offering profound and timeless insights into human nature and its consequences. The most effective leaders know that not every problem requires an immediate, costly solution. Sometimes, the wisest choice is to understand and manage the discomfort of a known risk rather than blindly invite a chaotic unknown.
At Imergo, we champion the power of storytelling to embed essential risk literacy and foster organisational cultures that are not only ambitious and results-driven but also profoundly aware of the cascading consequences of intervention. Let’s explore a less common, but profoundly insightful, fable that provides a crucial lesson on the complexity of risk, the dangers of reactive problem-solving, and the wisdom of managing known quantities.
The myth of the Fox and the Hedgehog: The discerning choice
The fable begins with a fox, caught helplessly in a thick bush and tormented by a swarm of mosquitoes that have feasted heavily and are now sluggish and full. A sympathetic hedgehog approaches, offering to drive the gorged mosquitoes away. The fox, however, rejects the offer. His reasoning is simple yet brilliant: The current mosquitoes, being full, are relatively docile and pose less of a threat. If they were driven off, they would immediately be replaced by a fresh, hungry swarm that would bite and torment him far worse. The fox chooses to endure the known, sated risk rather than trigger a new, aggressively hungry one.
The Risk Lesson: Intervention and the risk of unforeseen consequences
This insightful fable offers a crucial lesson on understanding the true nature of risks and highlights that effective risk management isn’t just about eradicating every problem; it’s about making discerning choices. The hedgehog’s well-intentioned offer carried the classic risk of unforeseen consequences.
- Knowing your risk is better than guessing at the new: The Fox understood his current tormentors – their impact, their likelihood, and the extent to which they were already ‘sated’ or managed. In risk management, this speaks to the value of truly knowing and assessing your existing risk landscape. A manageable, understood risk (e.g., a known level of technical debt or predictable quarterly revenue fluctuation) is often far less dangerous than a sudden, unquantified disruption introduced by a hasty, untested change. The focus must be on transparency about the risks you carry, not just on eradicating them.
- The risk of unforeseen consequences of solutions: The Hedgehog’s intervention, while intended as a solution, was actually a major threat: replacing a manageable, albeit irritating, problem with a potentially far worse one. Many reactive solutions in business, implemented without comprehensive foresight, can trigger new, more severe risks. For example, a quick fix for a single software bug might inadvertently introduce a major security vulnerability elsewhere; or a hasty, company-wide cost-cutting measure designed to fix short-term budget concerns could lead to mass employee burnout and attrition, destroying long-term talent capital. The solution becomes the catalyst for the next, bigger crisis.
- Strategic risk acceptance: The ‘Better the Devil You Know’ principle: This fable is perhaps the most eloquent argument for the principle of ‘better the devil you know.’ It highlights the power of strategic risk acceptance. Sometimes, an organisation is better off choosing to strategically accept the known, manageable risk of an established challenge (like a predictable level of technical debt or an aging, non-critical asset), rather than initiating a costly, unpredictable intervention. This principle means avoiding the urge to mitigate every imperfection and instead, conserving capital and energy for risks that are truly catastrophic or unknown. Effective risk management requires establishing clear criteria for when a known risk should be accepted instead of mitigated.
Beyond the fable: Cultivating strategic discretion
The myth of the Fox and the Hedgehog serves as a powerful reminder that intervention is a risk in itself. True leadership understands that sustainable risk management requires strategic discretion and a profound awareness of systemic consequences.
To embody the wisdom of this fable and build a truly resilient organisation, leaders must:
- Implement systemic intervention analysis: Never approve a major project or solution (especially a reactive one) without a formal process that maps its full, systemic impact. Ask: “What new, hungry ‘mosquitoes’ will this solution invite, and where will they bite us?”
- Prioritise risk transparency over illusionary perfection: Focus resources on accurately assessing and transparently communicating known risks rather than chasing the impossible goal of eliminating every single one. Understanding your current vulnerabilities is the essential foundation for sound decision-making.
- Define a risk acceptance threshold: Establish clear, board-approved criteria for when a known, manageable risk should be strategically accepted. This allows the organisation to conserve capital and resources, prioritising mitigation efforts only on truly catastrophic or unquantifiable threats.
By internalising the lessons of this insightful tale, organisations can ensure they are making discerning choices that balance the discomfort of a known challenge with the potentially catastrophic consequences of a hasty, ill-conceived solution.