Risk management is often not about "winning" or "losing". It's about managing uncertainty and its consequences.

Risk management www.wealthandrisk.nz

New York magazine recently published an interesting article on climate change - "The sunniest climate-change story you've ever read". It asserts that 2015 "is the year humans finally got serious about saving themselves from themselves."

Some quotes from the article are at the foot of this post. But for the purpose of this blog, I found this paragraph especially relevant:

"misleading metaphors have dominated our thinking about the problem. Is it too late? Have we reached a point of no return? All-or-nothing thinking can be a useful tool for communicating urgency to the public, just as one would communicate the urgency of a war or a clarifying indication of political commitment. But it has also become a trap into which many of us — especially environmentalists — have fallen. In truth, the fight to save the Earth from climate change is not something that will be “won” or “lost.” Climate change is a problem of risk management"

In many parts of our personal and professional lives, it's easy to think of things as being black or white, especially when uncertainty is involved.

Sometimes, risk management is about avoiding a bad outcome. But more often, it's about taking steps to make a range of bad outcomes less likely, a range of good outcomes more likely, and taking steps to manage the consequences of whatever happens so that the outcomes are better than they might otherwise have been.

Climate change is a good example of this. 


Some quotes from the article:

  • "American carbon emissions peaked in 2007 and have fallen since"
  • "As recently as 2009, analysts believed China’s carbon-emissions level would continue to rise, not reaching its peak until 2050. / "China is widely expected to move its peak-emissions date up to 2025 by the Paris conference [later this year]."
  • "In 2009, China promised to reduce its carbon intensity by 45 percent from its 2005 level by 2020. It is well on track to achieve this (it’s already down 34 percent), and is now promising to deepen the cut to 60 or 65 percent"
  • "In 2014, China’s coal production and its consumption both fell, and the drop appears to be continuing, or even accelerating, this year."
  • "[China] plans to increase its solar-energy capacity this year alone by 18 gigawatts — as much solar-energy capacity as exists in the U.S. right now."
  • "In 2009, 523 coal plants operated in the United States. More than 200 of them have since shut down, displaced mostly by natural-gas plants, which emit half as much carbon dioxide."
  • "Only one coal-fired plant has been green-lit since 2008, and new regulations make it virtually certain that no coal plant will break ground in the United States ever again."
  • "In the sunniest locations in the world, building a new solar-power plant now costs less than coal or natural gas, even without subsidies, and within six years, this will be true of places with average sunlight, too."
  • "By 2023, new wind power is expected to cost less than new power plants burning natural gas."
  • "In the first half of this year, renewable-energy installations accounted for 70 percent of new electrical power."

Sonnie Bailey

Sonnie is the founder and principal of Fairhaven Wealth.

Before founding Fairhaven Wealth, Sonnie worked in the legal and financial services industries for over a decade.

Sonnie first became involved with financial advice as a specialist financial services lawyer. For many years, he was an “adviser of advisers”, reviewing thousands of advice files prepared by hundreds of financial advisers, and providing feedback in relation to the quality and appropriateness of advice; industry best practice; risk management; and regulatory compliance. He has published work in industry publications and spoken at various financial advice conferences.

Sonnie has also worked with banks, investment management firms, insurers, and derivatives providers.

Sonnie has worked as a private client lawyer, focusing on succession, estate planning and trusts. He ran his own legal firm in Australia before relocating to New Zealand. He has also acted in independent trustee and company director positions.

Sonnie is passionate about helping people achieve their goals and manage the risks to which they are exposed.

He has written extensively on his blog, New Zealand Wealth and Risk, which can be found at www.wealthandrisk.nz.

Sonnie is married to his wonderful wife Chrissy, and has two young children, Ben and Anna.