Risk - You Don't Know What You Don't Know.

CFOs have a unique opportunity and responsibility to help their organizations identify and deal with risks. One thing I have learned is that we don't always have a balanced sense of what's really risky, and what's not.

Years ago I went on a backcountry ski expedition in the Canadian Rockies. We skiied into Bow Hut, an Alpine Club of Canada shelter at the base of the Bow Glacier. It was my first backcountry ski trip and I found it very hard work. The last section of the ski involved traversing into and then climbing out of a deep bowl on to a rocky hump the hut was literally anchored to.

The switchback climb up onto the hump took almost everything I had. I focused on my ski tips, my heart rate and my breathing and not much else. Once I got to the hut I found a chair by the wood stove and I don't think I moved for two hours.

The next few days were filled with climbing mountains. The first was a rounded dome and we skied right to the summit. The second peak rose out of a rocky ridge. We skiied up as high as we could and then left the skis for the final climb up the ridge to the summit. We got to a point on the ridge where the slope ran way down to the right and way down to the left. I became concerned that a slip on the snow, in either direction, could lead to a long and fatal fall down the snowy slopes. I suggested we rope up and belay each other across the most exposed point, which worked well. We soon found ourselves on the summit of Mount Olive! We returned to the hut safely again belaying past the tricky point.

The next morning we skied out. This time we were skiing down off the hump and into the bowl. Instead of heads down focusing on heart rates, we were able to look out and enjoy the view. The bowl we had climbed out of a few days before was below the east face of Mount Olive. We noticed that there was a lot of snow accumulated on the slopes below the cliff face. Any snow slide would flow right into the bowl we were skiing in to. It may not have been the best idea, but one of our party started yelling to those in the front to watch out for avalanche danger. We made good time dropping into and skiing out of the bowl and down the valley, only stopping to rest when we felt we were far less exposed to avalanche danger.

This experience taught me that our perceptions of risk may really be out of line with reality. Years later I climbed Mount Olive in the summer, using the same route. That crux on the ridge I had been so concerned about turned out to really not be that big of a deal. With the snow gone, I could see that one either side there was a nice long slope with no big rocks or cliffs. Even the winter, a fall would have just been a fun story. So, I was worried about something without much risk.

The avalanche danger was something else though. I don't know much about avalanches. I've never been in one. I've seen rock falls and snow slides on distant mountain slopes, but I don't know what to look for in checking a steep snow slope. I spent a couple of hours in an avalanche bowl, worried only about how tired I was. The risk of an avalanche never crossed my mind, but I now believe it was very real.

I've thought about that experience a lot. At other points in my life, especially as a company fiduciary, have I been worried about the wrong thing. Have I been roping up on tobogganing hills and picnicking in avalanche areas?

There are no easy ways to compensate for "you don't know what you don't know" but in a recent Unconstrained CFO forum discussion we all gained incredible insights about the risks others had faced. If you don't know what you don't know, consider joining a group of CFO peers who can have your back, while you have theirs.

Thanks for reading,

Derek