Change brings risk. Wherever you find change – change in products, processes, personnel, systems, regulation, laws, markets, environments, whatever, – you will find risk. And those risks to your existing products, processes, etc, need to be understood and managed.
Where we do consider change-driven risks, we normally focus on preventing or treating the downside risk – answering the “what could go wrong here?” question.
But change also brings opportunity to do things differently, to disrupt the status quo, to innovate – i.e. to exploit upside risk.
At the 1968 Olympics in Mexico City, a little known 21-year old engineering student from Portland, Oregon – someone considered to be an average athlete – stepped up to take the high jump, and shocked the watching world by jumping over the bar backwards. Not only that, but he won the gold medal and set an Olympic world record as well. Dick Fosbury had invented the “Fosbury Flop” and leapt from anonymity to being considered one of the most influential athletes in history. Every high jump gold medal winner since then has used Fosbury’s technique.
Traditionally, high jump pits had been sand or sawdust, so you really wanted to land on your feet on the other side. Then, foam mats were introduced, and Fosbury’s high school was one of the first to introduce them. They meant that you wouldn’t get hurt if you landed on your back or side. Fosbury then started experimenting, and he said that the style just evolved within him. But it was the environmental change (the introduction of foam mats) that allowed the innovation to happen.
Risk management is about managing things that affect achievement of objectives, and that includes exploiting the upside. And change brings that opportunity.
Source: Wikipedia, mayooshin.com