Why the Best Risk Strategies Aren’t Logical — They’re Psycho-logical
Lessons from Rory Sutherland’s Alchemy for Building a Smarter Risk Culture
This week, I’ve been engrossed in Rory Sutherland’s book Alchemy — and frankly, I’m embarrassed it took me this long.
It’s a brilliant reminder that the best ideas in business often don’t make sense — at least not rationally. They work because they tap into how people feel about value, trust, danger, and loss.
It got me thinking:
What if our biggest blind spot in risk strategy isn’t missing a data point — it’s assuming that logic will save us?
🧠 Why Logic Can Be a Trap
We love risk registers, frameworks, and actuarial models.
But they’re often built on a hidden assumption:
👉 That people behave rationally.
(Spoiler: they don’t.)
When it comes to risk, emotion often beats calculation. Not because people are stupid — but because in uncertain, complex environments, feelings are faster, stickier, and (sometimes) more protective than spreadsheets.
Here’s how that shows up in practice:
🔸 People don’t fear the most statistically likely outcome — they fear what feels uncertain.
🔸 A risk that looks managed is often more reassuring than one that is managed.
🔸 Most risk communication fails because it explains when it should empathise.
🔸 Stakeholders want confidence, not caveats.
🛠 Practical Shifts to Build a Smarter Risk Culture
If you want risk management to actually work in the real world, you need people to internalise it instinctively — not just comply with it mechanically.
Here are four shifts that stand out:
✅ Frame Risk in Human Terms, Not Technical Ones
Risk isn’t just about probabilities and severities — it’s about how people feel about danger, loss, and uncertainty.
If you want teams to spot and respond to risks early, you have to talk about it in language they live every day.
Example: Instead of “third-party vendor failure risk,” say, “What happens if our partners let us down when we need them most?”
✅ Use Storytelling and Symbolism, Not Just Spreadsheets
Data doesn’t move people. Stories do.
Strong risk cultures are built on shared narratives: cautionary tales, close calls, "we almost lost it" moments.
Symbolism matters too — small rituals, visible reminders, and common language that keep risk felt and seen, not buried inside a monthly report.
✅ Design for Confidence, Not Compliance
Compliance is a box-ticking exercise. Confidence is a felt sense: “We know how to act when things go wrong.”
Good risk management empowers people to make smart decisions under uncertainty — not just follow procedures.
✅ Build Trust, Not Just Processes
Good risk culture isn’t about having the thickest handbook or the longest compliance checklist. It’s about creating an environment where people trust that raising a risk, challenging assumptions, or flagging uncertainty will be valued, not punished.
If your people don’t trust the system (or worse, don't trust each other) no amount of documentation will save you.
Trust turns risk management from a box-ticking exercise into a living, breathing part of how decisions get made. It turns technical protection into a bigger emotional contract: "We’re ready. We’ve thought about this. We’ve got each other’s backs."
🧠 The Real Lesson
Don’t just quantify risk.
Psychologise it.
If your risk strategy only makes sense to a spreadsheet, it won’t survive first contact with real people.
Logic might explain risk, but it doesn’t move people to act on it — or to trust your judgment when it matters.
If you want your risk strategy to hold up under real pressure, you have to design for something messier: belief, instinct, confidence.
Risk culture isn’t a technical problem. It’s a human one.
Disclaimer: This post is for general informational purposes only. It does not constitute legal or financial advice. Always consult qualified professionals for guidance tailored to your specific situation.