Environmental Risk and Uncertainty: Expertise Matters Most

The kind of expertise that matters most in risk and uncertainty is expertise in making decisions under uncertainty.

Expertise matters. Not subject matter expertise, say in something like rebuilding a high-performance motor or understanding the biochemical behavior of blue algae. The kind of expertise that matters most in risk and uncertainty is expertise in making environmental decisions under uncertainty.

Risk and Uncertainty Defined

I prefer economist Frank Knight’s 100-year-old definitions of risk and uncertainty. I have found them to be most understandable in practice, and they have stood the test of time.

Knight believed that risk was where knowledge was complete, probabilities could be determined, and outcomes predicted. Uncertainty, on the other hand, encompasses imperfect knowledge, unknown or unknowable probabilities, and unpredictable outcomes.

Knight believed that moving from a state of uncertainty (unknowns) to a state of calculated risk (knowns) was the key to making profit, of course, considering that in open markets the opportunities to outsmart others have a limited shelf-life.

Small Worlds versus Large Worlds

Thirty years later, statistician Jimmie Savage described two human-constructed realms where risk and uncertainty exist. In Small Worlds, we deconstruct larger problems into smaller states that allow us to isolate variables, assume variables act in highly independent ways, and minimize uncertainty. However, in Large Worlds we do not perfect understanding of cause and effect. We struggle with what to leave in and what to leave out of our predictions. Uncertainty reigns. And to make matters worse, the models and associated predictions in our decomposed Small Worlds do not aggregate perfectly back into Large Worlds.

In Large Worlds full of uncertainty, understanding what is left out (or missing) is more important than understanding what is included. This rings true in the advice that one of my political mentors once gave me when dealing with politicians – listen to what isnot saidrather than what is said. Savvy politicians and political experts do the former. Rookies and political hacks do the latter, and usually are greatly disappointed.

Risk versus Uncertainty

Expertise in decision making under risk is much different from expertise in decision making under uncertainty. In decision making under risk, information that creates knowledge may be available. However, we may not have the experience to assemble it, remove individual biases, communicate it, or use it effectively in group situations. There is an argument, and a good one, that inexperience in decision making is the primary reason we need risk models and risk frameworks.

Survival Matters Most

Expertise in decision making under uncertainty, knowledge is imperfect and modeling predictions of the future are highly inaccurate. Expertise – experience coupled with feedback and learning – produces bounded rationality. In other words, expertise dictates that there are simply certain things that we will do and certain things we will not do. No reliance on models here. No optimization here. Where uncertainty dominates, survival – of you and your “tribe” of loved ones – matters most. Enter the Precautionary Principle as a potentially desirable approach.

Decisions Under Uncertainty Are Different

Expertise in decision making under uncertainty is also a reason that risk managers – or managers of the knowns – are usually stuck in a world of compliance rather than value-added decision making in the C-suite. It is one thing to be a good risk manager, financial manager, statistician, scientist, or engineer working in small, decomposed worlds. Being a subject matter expert in a technical field, including risk management, is neither necessary nor sufficient for being a decision maker in situations dominated by uncertainty.

Environmental Expertise Matters

Bounded rationality for knowing what should be done and what should not be done is more important for decisions under uncertainty than relying on modeled predictions. Knowing what is missing is just as important as knowing what is included. Expertise matters.

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Gary Klein does a good job documenting how decision makers such as firefighters, medical professionals, soldiers, and others make decisions under uncertainty. Gerd Gigerenzer is an excellent reference for decision-making heuristics under uncertainty and has built an academic tradition around Herbert Simon’s discussions of bounded rationality. Nassim Taleb and Annie Duke also have good discussions in their current books, albeit from slightly different perspectives. And, of course, Knight is a worthy source of study on this topic.

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This article was first published by JD Solomon on LinkedIn.

Solomon, J. D. (2018, October 10). Risk and uncertainty: Expertise matters most. LinkedIn. https://www.linkedin.com/pulse/risk-uncertainty-expertise-matters-most-jd-solomon

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JD Solomon Inc. provides solutions for program development, asset management, and facilitation at the nexus of facilities, infrastructure, and the environment. Visit our Environmental page for more information.

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 JD Solomon's work connects technical disciplines with human understanding to help people make better decisions and build stronger systems. Learn more at www.jdsolomonsolutions.com and www.communicatingwithfinesse.com.

How to Use Synergy to Communicate with the FINESSE Fishbone Diagram

Synergy builds on the principles that shape group behavior when making big decisions. Synergy is the second S in the FINESSE Fishbone Diagram.

Synergy is the second “S” in the FINESSE Fishbone Diagram, and it may be the most misunderstood. Many technical professionals focus on individual personalities, but when the stakes are high and the uncertainty is real, individual traits take a back seat. Group effects dominate. Decisions are shaped not by one person’s logic but by the gravitational pull of an inner circle. If you want to communicate effectively in these environments, you must understand Synergy and, more importantly, work with it rather than against it.

Why Synergy Matters More Than You Think

In complex decisions, no one—no matter how smart—can process everything objectively. Decision makers rely on trusted advisors to help them interpret the noise. That inner circle becomes the filter through which information flows, and the group’s collective behavior becomes the real audience for your message.

This is why Synergy sits on the bottom fin of FINESSE, alongside Empathy and Structure. These three bones are all about the audience. They remind us that communication is not about what we say; it’s about how the group receives, interprets, and reinforces it.

If you’ve ever watched a technically sound recommendation fall apart because one influential participant wasn’t on board, you’ve seen Synergy in action.

Three Group Effects That Shape Synergy

Recent FINESSE posts on Frame and Illustrate emphasize clarity, simplicity, and the discipline of staying focused on what matters. Synergy builds on those same principles by helping you understand the forces that shape group behavior.

Here are three group effects that matter most:

1. Loyalty

Loyalty is the price of admission to the inner circle. It protects the organization from external threats, but it also slows change. Alliances form. Members “stick together.” A technically superior solution can be lost simply because it disrupts existing loyalties.

What to do: Identify the influencers early. If you can’t get the decision maker, get the person the decision maker trusts.

2. The Planning Fallacy

Groups routinely talk themselves into unrealistic expectations—budgets that have never been achieved, schedules that have never been met, and performance levels that defy historical evidence.

What to do: Use Illustrate (the second bone of FINESSE) principles. Show the historical record visually. Make the unrealistic obvious.

3. Performance Culture

As organizations grow, the focus shifts from individual work ethic to group norms, political considerations, and survival instincts. People align with the group to stay in the group.

What to do: Frame the decision in terms of organizational priorities, not technical logic. Show how your recommendation supports the group’s shared interests.

Why Advocacy Fails—and Dialogue Works

One of the strongest messages from Facilitating with FINESSE is that advocacy rarely works in complex decisions. A team spends months developing a recommendation, presents it once, and hopes the group adopts it. But the group hasn’t processed the information together. They haven’t reinforced it among themselves. They haven’t built Synergy.

A dialogue decision process works better because it brings the group along. It gives them time to absorb, question, and share information between milestones. It acknowledges that advisors change, politics shift, and uncertainty evolves.

Dialogue builds Synergy. Advocacy breaks it.

How to Use Synergy in Your FINESSE Communication

Here are three practical ways to apply Synergy when using the FINESSE Fishbone Diagram:

• Engage the inner circle early. Don’t wait for the final presentation. Build relationships before you need them.

• Communicate through influencers. Outsiders are often seen as invaders. Insiders carry messages farther and faster.

• Give the group time. Big decisions require social reinforcement. Rushing the process creates resistance.

The Bottom Line

Synergy reminds us that communication is not a solo act. It is a group performance shaped by loyalty, norms, and shared experience. When you understand these dynamics—and design your communication to work within them—you move from presenting information to facilitating decisions. That is the essence of Communicating with FINESSE.

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The elements of the FINESSE Fishbone Diagram® are Frame, Illustrate, Noise reduction, Empathy, Structure, Synergy, and Ethics.

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JD Solomon Inc. provides solutions for program development, asset management, and facilitation at the nexus of facilities, infrastructure, and the environment.

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 JD Solomon writes and speaks on decision-making, reliability, risk, and communication for leaders and technical professionals. His work connects technical disciplines with human understanding to help people make better decisions and build stronger systems. Learn more at www.jdsolomonsolutions.com and www.communicatingwithfinesse.com

Why Asset Value is Poorly Done in Asset Management Programs

Treating asset value as a last step in the process or an administrative burden will simply not get the job done.

When asset managers claim their Computerized Maintenance Management System (CMMS) or Enterprise Asset Management System (EAMS) data is 90-95% accurate, they are referring to asset attributes. In my three decades of experience, the “asset value” in the databases is usually 20-25% complete. That’s a shame because how can an organization manage “anything of value” (your assets) if you don’t understand what they are worth?

An asset is an item, thing, or entity that has potential or actual value to an organization. – ISO 55000

A Story As Old As Time

My company is usually called in to help asset management programs that are struggling or, at least, not delivering the value that senior management wants. Here is a recent version of a common story related to asset values.

“We’ve been doing formal asset management for over a decade,” explained the 40-year-old asset manager who is assigned to the engineering department. “We have patterned our program on best practices from ISO 55000.”

I asked, “Well, what are some of your accomplishments?”

“We have stood up our EAMS, built our asset hierarchies, populated most of the attributes, and started a condition assessment program,” the asset manager confidently replied. “It took some time, but we finished our asset management policy, performed a level of service assessment, and started doing risk assessments.”

“So, how is it going with assigning values to your assets?” I asked.

The blank look told me all that I already knew, “We have not gotten to that part yet. We know we need to eventually get to it, but we have had too much other stuff to focus on.”

[“Well, after a decade, how do you know the value of what you are doing?” I rhetorically asked myself.]

Why Asset Value Is Poorly Done

Large organizations manage tens of thousands of assets, each with multiple attributes. Resources and processes are rarely sufficient to maintain accuracy across this scale. Acknowledging the gap is difficult, but ignoring it undermines planning, risk management, and being able to express the value of what you are doing.

1 No One Uses It, So No One Wants to Admit It

Many asset management programs exclude asset values from their CMMS or EAMS because most systems are designed as work order engines rather than strategic investment tools. Maintenance, operations, and engineering teams typically prioritize technical attributes like horsepower, pressure ratings, and PM schedules, but view financial valuation as "accounting data" that belongs exclusively to someone else.

Without a clear mandate to link physical performance to financial outcomes, the effort required to develop and update these values is often dismissed as a low-priority administrative burden.

2 Our Databases Are Poorly Configured

An organization’s CMMS or EAMS should capture the asset value, source of the value, and year of the estimate to establish a baseline for defensible decision-making. All three fields are essential for understanding the context of any rolled-up system valuation and for indicating potential data deficiencies. Additionally, without this information, asset managers cannot accurately adjust for inflation or validate the integrity of their lifecycle cost models.

3 Asset Managers Have to Work with Accounting

In my experience, most asset managers have their technical roots in engineering and operations. That’s ironic because the traditional driver for asset management is financial accountability.

It’s easy to fall into the trap that the physical side doesn’t match up too well with the fiscal side. In practice, there are plenty of examples of that. But that’s not really the deeper issue because most asset managers fully grasp the math of accounting and understand the basics of GAAP (Generally Accepted Accounting Principles).

The friction between asset managers and accountants persists because asset managers prioritize future performance and functional risk, whereas accountants focus on historical costs and standardized depreciation. This disconnect is not a result of technical ignorance but rather a mismatch of data application and functional objectives.

While an accountant sees a fully depreciated pump as a zero-value item, the asset manager sees a critical node in the system that requires a $50,000 overhaul to prevent a million-dollar outage.

Implementation Solution: Asset Value is Equal to Asset Condition

Treating asset valuation as a periodic, standardized engineering process mirrors the rigor of condition assessments and ensures that data remains both defensible and operationally relevant. Like implementing a condition assessment program, key aspects of executing a reliable asset value program include dedicating specific teams to review these values, funding the teams similarly to the condition assessment team, and updating the database every 3 to 5 years. This systematic approach establishes a reliable baseline necessary context for long-term capital planning, risk mitigation, and achieving a fundamental outcome of any asset management program.

Solution: R&R Forecast

A Renewal and Replacement (R&R) forecast is a long-term financial projection that identifies when and how much capital will be required to renew (rehabilitate) or replace assets as they reach the end of their useful lives. The forecast serves two purposes: it shows the peaks and valleys of financial needs (which the asset management program can level and show values) and the forecast acts as a stress test for the integrity of the CMMS/EAMS database. Senior management is particularly interested in the first purpose, so getting a mandate from above is not difficult.

Asset Value is a Core Component of Asset Management

Asset value is not an optional enhancement to asset management; it is proof that the program matters. If you cannot articulate what your assets are worth today and what it will cost to sustain them tomorrow, senior management has no rational basis for funding, prioritization, or tradeoffs. Treating asset value as a last step in the process or an administrative burden will simply not get the job done. Until you can quantify the value you manage, you are not managing assets, you are simply watching them age.

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Need help getting started? JD Solomon Inc. provides practical solutions to align asset values and forecast future operations and capital improvement funding needs.

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JD Solomon is the founder of JD Solomon, Inc., the creator of the FINESSE Fishbone Diagram®, and the co-creator of the SOAP criticality method^©. He is the author of Communicating Reliability, Risk & Resiliency to Decision Makers: How to Get Your Boss’s Boss to Understand and Facilitating with FINESSE: A Guide to Successful Business Solutions.