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The Artful Manager

Andrew Taylor on the business of arts & culture

Risk homeostasis

May 27, 2010 by Andrew Taylor

While wandering the web looking for some insights on risk assessment and risk management (two key challenges for arts and cultural managers), I found the following rather intriguing theory:

Humans have a target level of risk they find acceptable (physical risk, financial risk, personal risk, you name it). It’s not a shock to think that as you exceed that target, you change your behavior to reduce your risk. What’s interesting is the inverse. The theory further suggests that when people drop BELOW their target risk level, they often change their behavior to INCREASE their risk toward the target.

The link above talks about two karate schools — one uses full padding, one does not. The expectation would be that the one with full padding would have fewer injuries. But evidence suggests both will have the same. Says the article:

What’s happening is a process known as risk compensation. It’s a
tendency in humans to increase risky behavior proportionately as
safeguards are introduced, and it’s very common. So common, in fact, as
to render predictions of how well any given piece of safety equipment
will work almost useless.

This is the nature of homeostasis — the tendency of systems to stabilize around certain states. In this case, specifically, it’s risk homeostasis. To be fair, the jury is still out on whether this is a universal principal or a interesting guess. (One rebuttal claims the theory ”has no credence as a theory and is almost entirely lacking in empirical support.” Ouch.)

Still, I find it a useful frame to challenge any of us who assess, encourage, control, or balance risk-taking at our organization (creative risk, financial risk, credential risk, you name it). While we can increase buffers and safety nets to hedge such risks, we can’t ignore the risk-seeking or risk-averse tendencies of the people doing the work, nor the larger risk-related culture of the organization.

An organization used to living at the edge of bankruptcy may well find their way back there, even after a cash infusion. An organization used to playing it safe will need more than financial incentives and urging of artistic leadership to increase their risk.

The theory doesn’t suggest that safeguards are useless (don’t go playing professional football without a helmet, please). But it does infer that safeguards are a PART of a larger system, and that larger system has goals that may well work against the safeguards.

And a final insight for those heading off to the dojo, padded or not. Expect injuries.

 

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About Andrew Taylor

Andrew Taylor is a faculty member in American University's Arts Management Program in Washington, DC. [Read More …]

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