Homeostatic Risk

by: Chris Katchuk

Understanding risk is a proactive part of any undertaking.   Avoidance, transference, and mitigation are all avenues one can take regarding a risk response plan; however, is it possible that a system put in place designed to manage risk becomes a risk itself when it becomes commonplace?

The definition of homeostasis is, “the tendency of a system, especially the physiological system of higher animals, to maintain internal stability, owing to the coordinated response of its parts to any situation or stimulus that would tend to disturb its normal condition or function.”  This sounds like a positive when it comes to nature, and in most cases it is.  So the question is how is the balancing act nature designed to maintain be described as a risk?

To explore this further let us look at the theory of risk compensation.  This theory suggests that people typically adjust their behavior depending on a perceived level of risk involved.  For example, I would be much more cautious driving a vehicle built in the 1960’s vs. one built in the 2000’s.  One becomes quickly aware of the technological breakthroughs over the last several decades regarding car safety.  From airbags, ABS brakes, seatbelts, crumple zones, and even sensors mounted in a vehicle bumper, all these additions have been added to cars to make them safer.  Thus, when driving a vehicle without these features one would tend to be more cautious given the risks involved.   The theory is proved out on a daily basis in all behavior domains including food and alcohol consumption, finance, sports participation, and personal relationships.

The resulting RISK would not exist if it not be for human nature.  Homeostatic risk suggests that people will still maximize their benefit when comparing the cost and benefits.  This behavior has the potential to negate to certain degrees those technological advances in vehicle safely features described above.  What was designed to keep people safe increases the levels of risk people are willing to take while driving, thus impacting the intended positive benefit.

A good example of this is in 1967 when Sweden changed the law relating to which side of the road to drive on. They made this change due to studies that showed this was a safer way to manage traffic.   In the early hours of March 9, people on the left side of the road were directed to the right side of the road and vice versa.  The immediate result of this change was a drop in traffic related deaths by over 30%.  This can certainly be attributed to an increased awareness of ones driving.  The entire country essentially had to learn how to drive all over again.  People reduced distractions, speed, and risk in general to compensate for the dramatic change in traffic pattern.

The roads were safer for a time but by 1977 the accident and death rate were already back up to the levels before the change.  The reason is simple, once people became accustomed to the new (safer) traffic pattern, they reverted back to their normal (risky) driving. The homeostatic risk in action neutralized the safety benefits as people, assuming they were safer, took more risk as a result.

While this example is solely based on driving safety, the idea of homeostatic risk should not be lost on other areas.  When running a business an owner must decide which projects to undertake based partly on the risks involved.  Identifying the risk involved and assessing their impact will not be sufficient when you actually encounter them.  A risk response plan for all identified circumstances, including homeostasis, is crucial to project success.  After all, natures balancing act could find you falling without a net.

http://www.volvoclub.org.uk/history/driving_on_right.shtml

About Chris Katchuk

Chris attended Hobart & William Smith college in upstate New York where he majored in English and American History. Upon graduation, Chris started his own business in 2005 in the construction industry. After selling the business in 2007, he went to work for Redwood Analytics as the Marketing Specialist. Currently he works for LexisNexis as the Operations Manager the Training and Professional Services Team.