The new risk management.(Sounding board)

In a compelling analysis of the decision to launch the Challenger space shuttle on 28 January, 1986, Diane Vaughan has questioned the generally accepted explanation of that event. Instead of specific managerial wrongdoing combined with technological failure, she claims in her book The Challenger Launch Decision that 'no extraordinary actions by individuals explain what happened: no intentional managerial wrongdoing, no rule violations, no conspiracy. The cause of disaster was a mistake embedded in the banality of organisational life.' The message is that risks and their associated opportunities are rooted in specific institutions and practices, in daily operations which become organisational habits. If we are serious about risk management, we must be very cautious in assuming that legal, institutional and political demands to blame particular individuals and hold them responsible correctly identify the root causes of risk. Rather, the mundane transactional life of organisations deserves much closer practical and intellectual attention.

There is a long history of technical risk management practice in disciplines such as finance and engineering. Recently, the category of 'operational risk' has emerged in policy thinking. This was first a kind of dumping category for risks which can not be dealt with elsewhere, or are less amenable to technical analysis. Later it appears as a more …