In 1989 Henry Fairlie wrote a cover story for The New York
Republic, 'Fear of Living'. He noted, `The first Apollo space
craft caught fire during a test on the launch pad. Three astronauts
were killed, the nation was shocked and horrified, all the more
because the screams and scrambles of the astronauts could be
clearly heard'. After a brief delay in manned flights, the Apollo
program resumed with strong public support; within 18 months,
Apollo 11 landed on the moon. Fairlie contrasts the Apollo tragedy to the 1986 Challenger
disaster. `The prevailing mood in America so panicked NASA
that it took almost three years to send up another shuttle', he
observed. `In 19 years between these tragedies, the idea that our
individual lives and the nation's life can and should be risk-free
has grown to be an obsession threatening to create an unbuoyant
and uninventive society.' Taking risks is a normal part of our daily routine. The act of
living involves minute-by-minute decision-making focused on
survival through the practical management of risks. The act of
breathing exposes each individual to the risk of infection while
the act of crossing the road could almost be considered suicidal.
We deal with these constant threats by observing simple rules of
hygiene, safety or what may be labelled as common sense. The
rules of community, designed to minimise risk in society, can at
times lose focus and result in the imposition of schemes that have
a far greater cost than the issues from which they protect.
Effective management of risk, whether in the community or a
business is about awareness and balance and the elimination of
unacceptable risk. Risk cannot be eliminated from our lives or our working
environment. However it can be managed if it is properly
understood, monitored and controlled. The purpose of my
presentation today is not to provide a comprehensive technical
risk inventory but to capture the essence of risk and the
application of management strategies designed to deal with it in a
positive fashion. The basis of our differential financial reward
system is risk. The key to successful management is to deal with
the downside risks in such a fashion that the benefits of enterprise
are not eliminated. The key question any investor must consider
is `can the major risks assQciated with a venture be managed or
eliminated while retaining a greater proportion of upside
potential'. The answer to this question is the ultimate value an
investor would assign to any project. In reviewing the relevance of risk to our industry the range of
papers to be presented today provide examples of how
management deals with specific components of risk. In each case
the value of the business has been enhanced by the practical
application of balanced risk management. The ultimate success
of the industry depends very much on this concept as it also
provides a public showcase upon which we are judged.
Therefore, from all perspectives the effective management of risk
is a cornerstone from which to build a stable and progressive
mining industry.