ERM Forum keynote Stephen Carver: The new Space Race

Risk management has a reputation for caution and deliberation, but not moving fast enough can be a risk in itself. This is the note of warning that Stephen Carver will deliver in a “call to arms” to Airmic’s ERM Forum on 7 December.

The new space race taking place between Elon Musk and Jeff Bezos provides Stephen with the illustration for this point. The two American billionaires are markedly different in the way they approach risk, both offering lessons for enterprise risk managers across sectors.

“They have two very different approaches to the way they manage risk but they’re both rapid,” Stephen says. “The lesson here is that ERM needs to shake itself up, because it’s become too much about saying no, whereas it should be about speeding things up.”

First, he describes Elon Musk’s approach to risk for SpaceX.

“His way of managing risk is to run fast, fail often and fix it. This ‘fast failure’ approach is anathema to traditional risk management, in which we are meant to stop, think, calculate and plan before we move. However, results show that Musk is frighteningly effective at what he does,” he says.

Most risk functions simply will not allow a fast failure approach, he emphasises, meaning that risk managers do not move fast enough.

“It is indicative of a wider culture, in which most management is driven by fear, from fear of breaking the rules on governance to fear of offending someone,” Stephen says.

“Most management driven by fear: fear of breaking governance rules; fear of offending someone; fear of being sued; fear of being called out and attacked afterwards. The result is that people feel disempowered. It results in ‘learned helplessness’, in which people want to be given step-by-step procedures to follow.”

Musk has been called out over the years by traditional industry rivals – aerospace giants such as Boeing and Lockheed Martin – but has continued to confound his critics.

Stephen’s own CV as a project manager includes working with Richard Branson at Virgin, and for Haliburton in the offshore oil sector. Most of his skills and experience has been transferrable between sectors, he suggests.

Jeff Bezos, founder of Amazon and rival to Elon Musk in rocketry and overall wealth terms, is almost a direct opposite character in his approach to risk, Stephen explains.

The motto of Bezos’s space venture, Blue Origin, is “Step by Step, Ferociously”, with an eccentric coat of arms featuring two tortoises climbing to the stars.

“Bezos doesn’t move unless he’s thought about every sort of risk involved. He moves step by step in incremental stops,” says Stephen. “We know who won in the end between the hare and the tortoise, and he sees Elon Musk as the hare.”