Positive Risk

Positive Risk

Positive Risk Jonathan Poland

Positive risk refers to the potential for achieving an outcome that is too good. While risk is often associated with negative outcomes such as financial losses, it is also possible to set targets for positive outcomes. In these cases, it may be desirable to avoid achieving too much of a good thing.

Positive risk is a controversial concept, as many people believe that risk only refers to negative outcomes. However, the idea of positive risk is increasingly accepted in risk management practices across various industries. The appeal of positive risk from a risk management perspective is that it allows individuals and organizations to focus on achieving a target rather than simply avoiding negative outcomes. The following are a few examples of positive risks.

Economic Risk

A low unemployment rate is a good thing. However, it is common for policy makers to avoid the positive risk that the unemployment rate dips too low. An extremely low unemployment rate tends to trigger inflation as the supply of workers dries up and employees begin to demand higher and higher salaries to switch jobs.

Project Risk

Project Managers manage the risk that a project is over budget and the positive risk that it is under budget. Under budget projects are usually viewed as the result of inflated estimates that potentially tied up resources unnecessarily.

Supply Chain Risk

It is increasingly common for supply chains to run on a Just in Time method of inventory control whereby inputs arrive just as they are needed. As such, positive supply chain risks such as early deliveries are commonly managed.

Engineering Risk

Engineers may manage the risk that a building won’t last long enough. They may also many the positive risk that it is built to last too long. In other words, an office building built to last 10,000 years was likely over-engineered from the perspective of those financing the project.

Competitive Risk

A business may want to beat all competitors. However, a business that completely dominates a market may hope that their competitors survive so that they don’t attract the attention of regulators who view the business as a monopoly.

Technology Risk

In the pursuit to advance technology their are risks that technology could become so advanced so as to be destructive to things that humans value such as culture or life itself. For example, the risk that artificial intelligence will grow to dominate things that humans now control. The potential for machines to become too smart could be viewed as a positive risk.

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