Sta Hungry Stay Foolish

Stay Hungry. Stay Foolish.

A blog by Leon Oudejans

Morality vs risk management

Today, we are used to living longer and longer. As a result, we are having more and more problems in accepting death. Nevertheless, death is (still) an inherent risk of life. When society no longer accepts death, a dilemma will arise: who is entitled to live and who is marked to die? How to define such risk management criteria in the light of morality?

In general, we measure risk by using two dimensions: probability and impact. We classify such risks from (very) low to (very) high. Old people have a high risk of dying but can still make significant contributions to society (ie, impact). Young people have a low risk of dying but may fail to deliver a contribution to society. A risk assessment might decide who gets priority (eg, in healthcare).

Our zero (0) risk appetite for death creates huge challenges for people managing risks, like elected politicians. Most infrastructure investments are based on average use of capacity rather than on peak use of capacity. This implies (future) congestions, like traffic jams on highways and waiting times in hospitals. An exception is the electricity network, which is built for delivering peak capacity.

These waiting times in hospitals can be seen as risk thresholds: we accept the risk that we cannot get immediate healthcare. Else, our income taxes would need to be much higher. Each political party makes its own (ideological) assessment about the cost of public healthcare versus the height of income taxes.

The combination of zero risk appetite and a (positive) risk threshold is highly unusual in enterprise risk management. Hence, the risk (mitigating) measures taken by governments to address the coronavirus pandemic were exceptional: declaring (military) emergency law, bypassing constitutional law while issuing (probably illegal) emergency decrees.

These risk measures were (said to be) taken to lower residual risk (ie, death). However, these risk measures were also necessary considering implicit – and political – risk thresholds, like: (i) inadequate healthcare capacity, (ii) avoiding unacceptable waiting lines at hospitals, and (iii) preventing moral judgement about who is entitled to live and who is marked do die.

Moreover, the lack of available risk measures was nicknamed “flattening the curve”. The flipside of that decision was a (much) longer duration of the (risk and virus) curve.

Last but not least, risk transparency on highly infectious diseases is usually low given their (very) low frequency and (very) high impact. Late March, the WHO admitted that more corona fatalities were happening inside (eg, bar, church, house, office, stadion) than outside (eg, beach). Recently, the WHO finally admitted that aerosols can cause a coronavirus transfer (eg, BBC).

Ironically, the debate on voluntary ending of individual fulfilled lives, may allow governments to define a mandatory risk threshold: who is entitled to live and who is marked do die.

Note 1: all markings (bolditalicunderlining) by LO unless stated otherwise.

Note 2: no song given the sensitivity of the above subject


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