Skip to Content

The risk thermostat – a balancing perspecive on risks and perception

Today I would like to share John Adams‘ inspiring perspective on risks. He basically argues that rewards and accidents/losses are consequences of risk taking. Rewards influence the propensity of a person to take risks. Risk propensity varies from every person to another. On the other hand, failures and losses influenced the perceived danger. Both influence the so-called balancing behavior. Using this model, John Adams argues that today’s institutional risk management is only focusing on the lower part – the accident reducing loop. This will result in a useless pursuit of “safety at any costs”.

John Adams has blogged several interesting articles on risk in general and many other articles worth reading.

You must be Logged on to comment or reply to a post.
  • Interesting....this may have implications for organizational design such that they could actively design reward and control structures to encourage "risk-taking behavior"....this could promote innovativeness among employees...

    • Hi Suparna,

      thanks for your comment. We are currently working on such (as we call it) exploratory control structures and will hopefully come up with controls that support innovativeness.