In today’s business world, risk management is often regarded as a science requiring the use of increasingly sophisticated analytical tools and techniques. This can provide a false sense of security because having risk management plans based on quantified estimates of probability and impact can result in the misguided belief that the organization has its business risks under control. In reality, the biggest threat to business is often the failure to implement a holistic, “art- and science-based” approach to risk management, especially in the rapidly changing environment in which most firms now operate in.
In support of this argument, there is growing evidence that the main types of business risks arise from factors that cannot be directly observed or easily quantified and measured. While companies increasingly turn to project-based work to achieve their business goals, studies reveals that a high proportion of organizational projects fail to deliver their goals because of people-related factors.