Avoid danger: It’s one of our most basic intuitions. When faced with terminal, irreversible, i.e., catastrophic, loss potentials, we don’t get a second chance. Precautionary risk management is about avoiding catastrophic potentials. Avoidance, including the use of prevention/ protection measures which reduce the likelihood of loss to “near zero”, eliminates the threat of loss. Statistical methods, that attempt to balance costs and benefits based on expected-values or “averages”, are simply unworkable in the catastrophic domain. The problem with catastrophe is that in the long run, there is no long run: We don't get a "second chance". Logically, the alternatives that remain are prudent avoidance, and fatalistic acceptance (“we can't do anything about it, so why worry?”). With respect to high-stakes risk, you are either a precautionist, or a fatalist: There is no “in between”. In fact, in the world today, fatalism may be the dominant response to rare, yet potentially catastrophic, risk potentials. It is often disguised by invalid attempts to extrapolate statistical approaches into this domain. Application of statistical methods in areas were they do not apply can only be described as a "psuedo-science" that can be terribly misleading (intentionally, or unintentionally).
A challenge to the wider application of precautionary risk management is that avoidance can result in foregone benefits of an activity, resulting in tremendous “opportunity cost”. Effective prevention measures may themselves be expensive. The alternative is, of course, ruin. The result is precautionary dilemmas: Doomed if we do, doomed if we don’t. Often, however, these dilemmas arise from a short-sighted view of progress that benefits special interests. Precautionary dilemmas can be eliminated by proper attention to alternatives analysis. The analysis of alternative paths to safe progress presents a truly proactive, preactionary risk management approach. In this sense, risk management based on risk anticipation becomes more fundamental than simple avoidance or acceptance.
The crucial first step in the decision process is recognizing the possibility of serious adverse consequences, i.e., those that may fall into the "Danger Zone". While sensing danger is itself an intuitive process, we can hone this intuition using a variety of formal methods.
To learn more about high-stakes risk and precautionary risk management, please refer to the following publications of Mark Jablonowski:
Risk Dilemmas: Forced Choices and Survival, Palgrave Macmillan, 2007.
Precautionary Risk Management: Dealing with Catastrophic Loss Potentials in Business, the Community and Society, Palgrave Macmillan, 2006.
“High-Risk Decision Making When Probabilities are Unknown (Or Irrelevant)”, Risk Management: An International Journal, Volume 7, Number 3, 2005.
“The ABC’s of High-Stakes Decisions”, The John Liner Review (The Review of Advanced Risk Management), Summer, 2004.
“Facing Risk in the 21st Century”, Risk Management, June, 2004.
“Dealing With Danger: A Fuzzy Approach”, in Proceedings of the 19th International Conference of the North American Fuzzy Information Processing Society (NAFIPS), IEEE Press, 2000.
