This page provides an outline of the historical context of risk engineering and management.
Possibly the earliest evidence of risk management to increase the chances of success in the face of obstacles is from 2,500 years ago. In The Art of War, Ancient Chinese philosopher and General Sun Tzu documents the need for Military Generals to carry out comprehensive threat assessments of their surrounding environment in order to understand their probability of winning a battle. This includes extensive discussion of planning for risk.
Around the 13th century, probability theory emerged as a means of better understanding the probability of winning in games or gambling.
Four centuries later, European trade merchants frustrated about the high risk and uncertain nature of sea journeys devised insurance strategies to hedge against the risk of merchant ships not returning from travel.
After World War II the world moved into the globalisation era, where large organisations expanded to take advantage of international sales opportunities. This led to soaring insurance premiums as companies were exposed to more risk and uncertainty. In response, global organisations started to look for ways to ‘self-insure’ through improved internal risk management. This spawned the Internal Control and Enterprise-Wide Risk Management disciplines.
In the present day, risk management is a commonly accepted management discipline. It is considered a critical component of most forms of strategic and operational management, in a wide range of professional specialisations, engineering disciplines, application categories and industries.
The information on this page was primarily drawn from:
- Webinar titled ‘Perspectives on Risk: Engineers, frameworks and new ways of thinking’, delivered to REBOK Community on 29 May 2018 by Warren Black, Principal and Founder, Complexus
Edited by Nadine Cranenburgh