Saturday, 3 October 2009

How Brakes Can Make a Car Go Faster

I recently attended a talk on Governance, Risk and Compliance at which Forrester analyst Tim Sheedy said something interesting and original.

He likened the Risk Management function in an organisation to the brakes in a car, and asked the audience what brakes do. The answer of course was that brakes slow down or stop a car. He agreed and said that's how organisations have seen the Risk Management function, i.e., as something that slows down business.

He then asked the audience how fast they would be willing to drive their cars if they knew the brakes weren't working. The answer was "very slowly indeed".

And so Sheedy pointed out that brakes actually make it possible for cars to go faster! In similar fashion, Risk Management helps business do more rather than less.

This reminds me of a couple of similar ideas I have heard.

One is around a way to prevent deaths due to car crashes. The conventional solution is to place an airbag in the steering column to protect drivers. The unconventional solution is to place a sharp spike on the steering column, with the effect that drivers will then drive very carefully indeed!

Another idea I have discussed on this blog earlier is about how Economics differs from Physics. You often make something happen by enabling its opposite. If you want to conserve hard currency within your economy, then you don't prevent people from taking it out (that will have exactly the effect you don't want). You should in fact make it easier for people to take hard currency out. That will ease the fears of investors who will then more readily bring hard currency into the economy, because they are assured that they can take it out whenever they want.

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