More than a decade ago, Chris Lloyd and Charles Johnson wrote in the Seven Revelations of Asset Management that we must “embrace uncertainty”.
This year we want to build on good practice to help our profession do this.
Let’s cut to the chase: our role as asset managers is to develop plans for the future, and yet the future, even next week, is uncertain. (Particularly at the moment.) We can’t not plan because we don’t know everything. In fact, uncertainty makes it even more essential to have plans.
Chris and Charles were right: we have to leap in.
It’s better to be roughly right than perfectly wrong. And there is no other option. Aiming for certainty is how we would ensure we are adding little value to asset decisions.
Board member Todd Shepherd has worked in North American power and water to develop a better approach to infrastructure risk and uncertainty, based on good practice in other professions and sectors. It’s not about a new tool, not software, but a more fundamental understanding of what managing uncertainty requires.
It requires not even trying to get a perfect answer.
Because the cost of perfect information is infinite – impossible. And good decisions don’t need it. What’s needed from us is practical ways to reduce our organisations’ uncertainty.
We’re currently drafting a much longer piece about how we make better decisions through better estimating and grasp of probabilities. And how it is, in the end, easier to deal with uncertainty than some of the weird things we do in infrastructure at the moment.
Are you in with us?
(We’d love to hear from you on risk.)
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