Research demonstrates that whereas experts define risk in a narrow, technical way the public has a richer, more complex view that incorporates value-laden considerations such as equity, catastrophic potential and controllability. The issue is not whether these are legitimate, rational considerations but how to integrate them into risk analyses and policy decisions.
Slovic
Broad Wealth
The Fifth Capital group has been a consistent proponent of an integrative, holistic approach to wealth creation with regard to the demand for organizations to account for their activities beyond a single purpose of monetary profit.
We adopt a definition of risk as being comprised of situations of opportunity and danger in which something of human value is put at stake and the outcome is not definite. The risk environment includes a quantifiable space insofar that the likelihood of future events is commonly estimated through the use of mathematised models. However, one must also acknowledge the presence of uncertainty as a structural unknowability. In addition to the limitations of using models that are not capable of specification a priori but are derived from providing a best fit to historical data by averaging the frequency of events over time thus excluding news and occluding short term volatilities and discontinuities, models that do not account for social or political costs of risk outcomes account neither for the multidimensional engagement of risk experienced by stakeholders nor the individual weighting amongst stakeholders of the importance ascribed to each outcome.
In consequence, Fifth Capital has developed the concept of Broad Wealth as an aggregate across Environmental, Social and Political capital domains and considers its interactions with Identity and Governance in an architecture for wealth creation highlighting the imperative for organizations to be able to define the limitations of quantitative method and to communicate to stakeholders the framework of culture and capability within which judgements are made in the face of uncertainty.
An organization’s ability to create wealth on a sustainable basis is maximised when the opportunities for the experience of negative surprise by its stakeholders - whether considered internal such as shareholders and employees or external such as partners, clients and the public - are minimised.