Risks must always be weighed up against potential benefits, says Dorothy Dalton.

In 1974 a chemical plant in Flixborough exploded killing 28 people and injuring 36. If the explosion had happened during the week the toll of dead and injured would have been considerably greater. Later that year, the Health and Safety at Work etc Act was passed. The Act, described as “a bold and far-reaching piece of legislation”, introduced a new system based on less-prescriptive and more goal-based regulations, supported by guidance and codes of practice. 

Good health & safety (H&S) practices are vital to all of us both at work and at home. Yet as the 21st century unfolded and in the face of the ‘compensation culture’, it was common for H&S to be used inappropriately to cover very low risk in almost every walk of life – on H&S grounds some primary schools even banned children playing with conkers and playing outdoors when it snowed. In 2010, Lord Young of Graffham’s review Common Sense, Common Safety attempted to bring good judgement back in to H&S matters. 

In 2005, Sorp (Statement of Recommended Practice) rightly put the focus on governance and risk, and required trustees to report annually on the identification and management of risk. 

More recently there has been much greater focus particularly on reputational risk. 

Sadly a similar pattern of behaviour, to that which occurred with H&S, has begun to develop among boards of trustees with regard to reputational risk. I observe many board meetings. It is not uncommon to witness very good proposals being rejected because someone round the board table points out the potential for reputational risk. No one suggests looking at the potential reputational risk of rejecting the proposal – after all everything in life has its advantages, disadvantages and risks. No one suggests weighing up the benefits against the risks (eg a risk-benefit assessment) before making a choice. 

Every proposal to a board has, at the very least, two options – agree the proposal or reject the proposal. Bad decisions can be made by not properly assessing the merits and risks of all options. Good governance is based on constantly dealing with risk and by always weighing potential risks of all options against potential benefits.