Created: 18 April 2017

This blog is based on my mini-chapter from the Risk Management Handbook: A practical guide to managing the multiple dimensions of risk (2016) edited by David Hillson. In the mini-chapter I explore the parallels of the evolution of the notion of risk and the praxis of risk management in development aid. Within this blog, I’d like to highlight the stages of the evolution of the notion of risk only.

The conceptualization of the notion of risk, starting from its origin at the end of the Middle Ages, has undergone an extraordinary extension that could be explained in four main qualitative shifts:

• Risk as an objective danger that resides in the nature. Originating at the end of the Middle Ages, this notion of risk is similar to that of hazard: natural disasters, famine, etc.
• Risk as an accident associated with human fault, an accident that is inevitable in the quest for economic progress. Gaining momentum in 19^th century, this notion of risk embraces industrially produced dangers and hazards and examines human fault as the cause of potential losses and damages.
• Risk as a social phenomenon that resides in the relations between human beings. By the end of 19^th century, risk is understood as no longer a phenomenon external to people (like hazard), it’s not misconduct either; instead, it resides among human beings and in their decisions. ‘Risks … presuppose decisions’ (Ulrich Beck). From this perspective, risk is perceived as socially constructed and politically loaded, as an uncertainty that can have either positive or negative impact on the risk bearers. Such risk ishard to rationalizeand accurately define in terms of probability, consequences, compensation and accountability. Risk is an integral part of human life: the multiplicity of uncertainties that surround us as individuals, organizations, or societies shape the landscape of threats and opportunities we face (i.e. the risk landscape).
• Risk as a global ‘grand challenge’ including mega risks that have a potential to affect the whole of humanity, jeopardize sustainable development, and even endanger our existence: for instance, climate risk, critical infrastructure risk, etc. One of the key characteristics of mega risks is the disruption of cause-effect relationships of risk in our globalized and highly interdependent society.  Such disruption occurs in various dimensions: across generations, geographic areas, sectors, institutions….…a ‘butterfly effect’ that often escapes our attention.  For instance, the recent financial crisis that has triggered a large wave of cascading risks across geographic regions, sectors, and industries. Understanding the ‘butterfly effect’ could help to understand how risk ‘travels’ across borders, sectors, generations, and help to identify early signals of potential mega risks.