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.
SlovicBroad 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 working definition of risk as being comprised of situations of opportunity and danger in which something of human value is put at stake. In addition to the limitations of using models that are not capable of specification a priori, models that do not account for social, political or environmental 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 this regard, we utilise the concept of Bounded Rationality - recognising that people were being expected to make informed choices when i. prevailing models had little if any empirical support from Psychology and that what support was claimed from Economics over-idealized decision makers ii. either no optimum solutions existed or if they did exist infinite resources (cognitive capabilities, time and cost) were needed to arrive at and confirm such solutions and iii. prevailing models completely ignored emotions, social engagements and cultural values that play key roles in real world decisions
In consequence, Fifth Capital developed the concept of Broad Wealth as an aggregate across Social, Political and Environmental 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.
The team’s practical, front line experience combined with interdisciplinary academic research activities places it at the forefront of addressing and accounting for the cultural and other behavioural influences present at the interface of economic decision-making and the broader considerations of societal well-being.
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