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Two tankers were trapped in heavy seas. One carried a load of red paint; the other carried purple.

Despite the heroic efforts of their captains, the ships drifted closer and closer together, until finally, they crashed.

The sailors were marooned.

I have, sad to say, a fondness for plays on words. It’s a horror for friends and family, and might account for why I have so few of either.

Edward Tufte has a different use for the word punning. He uses it to describe the confusion caused when one word has two separate meanings, and apparently considers it reprehensible. Of course, by adding this definition to an existing word, he has created an opportunity for more punning (his version) to happen, but it’s a small sin.

Reader Jim Ehrlich brought this to my attention in the context of last week’s column on risk mitigation (“The value of a little failure here and there,” KJR, 7/16/2007). His point: “Risk” is susceptible to punning, in that it encompasses two very different concepts — voluntary risks and inflicted risks. Business decision-makers conflate them at their peril.

Risk mitigation is a response to inflicted risks. Businesses don’t choose to place themselves in harm’s way when it comes to (for example) malware, system intrusions, embezzlement, or, for that matter, floods, fires, tornadoes or hurricanes.

With inflicted risks, the choice businesses have to make is how and how much to mitigate them. You install antivirus software and firewalls, implement process controls, develop and test business continuity plans, and buy insurance. You live with the residual risk, recognizing that no risk mitigation program is perfect.

Voluntary risks are a wholly different matter. The easiest way to make sense of them is to recognize that every decision a business makes is an investment decision. This is by definition: Decisions commit or deny time, staff and money. Everything else is just talking about it.

When you make an investment decision, part of your decision is how much risk you’re willing to take.

Some people are comfortable investing in junk bonds and hedge funds. They figure that for the increased risk of the investment, they get an opportunity for a higher payoff.

Once they make the decision to invest they don’t spend time and energy trying to mitigate the risk. What would be the point? Or, for that matter, the technique?

I know of no insurance company that will sell you a bad-investment policy, except maybe Lloyds of London, which will theoretically insure anything at all.

Were someone willing to write you a policy, though, it wouldn’t help. The underwriters would figure the risk and charge you a premium big enough to cover the spread. You’d come out about the same as you would if you’d invested in something safer, minus the insurance company’s profit on the policy.

So smart businesses (or, more accurately, businesses with smart decision-makers) do what smart investors do. They take risk into account during the due diligence they perform on each decision, and handle the remainder by choosing the rest of their “investment portfolio” (the sum of all decisions with impending business consequences) to provide a comfortable balance.

You’ll often read that businesses make decisions, then do what they can to minimize the risk. This isn’t strictly speaking true. In most cases, “minimize the risk” means becoming very skillful.

The failure rate for mergers and acquisitions, to take an example, is around 70%. The reason it’s so big is because most companies that engage in mergers and acquisitions are amateurish at execution. Among companies that are good at mergers and acquisitions, the failure rate is very low.

We’d be done except for one annoying, nagging point: Voluntary risks and inflicted risks aren’t entirely separate subjects. They overlap.

For example: A retailer might choose to locate a store in the inner city instead of a shopping mall. Built into that decision is an increased risk of vandalism.

Does that make the vandalism a voluntary risk? Yes — the retailer chose the location consciously, knowing the crime statistics for the neighborhood. Does that mean vandalism isn’t an inflicted risk? Of course not. In the end, vandalism is a choice made by the vandal, not the retailer.

The risk of vandalism is both chosen and inflicted.

So, with apologies to Dr. Tufte, punning isn’t always an intellectual sin. That’s because Earth isn’t so conceptually sterile that we can avoid punning entirely.

Especially when someone hands us a good straight line.

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“Economists have predicted ten of the last three recessions.”

Political pundits haul out this tiresome bit of ridicule every time an economist warns that colossal trade or federal deficits might not be such a good idea.

Ridicule is fun, persuasive, and best of all demonizes the group of people called them. It’s the more emotionally satisfying alternative to understanding what’s really going on. It combines scapegoating and ad hominem argument — two of the most trod upon paving stones in the road to becoming an idiot.

Your turn: Imagine your data center’s wiring has frayed insulation, overloaded outlets, and circuit breakers that haven’t been tested since Edison and Westinghouse battled it out.

The company ignores your concerns. You continue to warn of serious problems until at some point a fire breaks out.

You and your staff extinguish it. You again recommend rewiring the data center. And some mouthy executive points out that you have, “… predicted ten out of the last one fires.”

That’s the problem with risk.

Businesses can invest in three value creators: Revenue enhancement, cost reduction, and risk mitigation. One almost always dominates, not because it is the most important, but because it’s how the company and CEO are wired. They’re usually wired so that risk comes last. Here’s why:

Entrepreneurs usually focus on revenue. When you’re first building a business you need cash coming in the door more than anything else — not only to finance the company but to create confidence and credibility.

Entrepreneurs often get cost wrong — they either ignore it, at which point it can quickly get out of control, or they obsess, running the company so lean they choke off growth.

Those running large enterprises have a different perspective. They are accountable to the board of directors, shareholders (in theory) and various Wall Street analysts (in practice). That means having to justify all spending decisions.

Other than sales and advertising, the connection between expenditures and revenue can be very hard to demonstrate. The investments required to build sustainable revenue –in product quality and customer relationships in particular — can’t be linked to business success in a provable way. Among other challenges, the payoff for these investments can take years to arrive. Until they do, all you have is cost.

Few entrepreneurs spend time on risk, beyond buying insurance and some other basics. They figure they need luck to succeed. What’s a little more?

Those running large enterprises are more likely to acknowledge its importance — in theory. In practice, expenditures for risk mitigation don’t build shareholder value — the only true goal among the business Illuminati. And so risk mitigation generally takes a back seat to cost reduction.

You, in contrast, live in the world of risk. When your job is to keep the joint running, it’s your neck if the bad wiring ignites.

Persuading those who run your company to let you mitigate risks is always going to be a challenge. When significant expenditures of capital or effort are part of the request it’s tough. When changing how employees are supposed to behave — usually part of the plan — it’s even tougher.

Risk mitigation might be your top concern. To those responsible for business results it’s probably a distant third.

Worse, they might be right. Too often, those responsible for risk mitigation misunderstand their goal, trying for risk elimination instead. The result: They design ultra-low-risk environments that strangle innovation, ingenuity, and the free flow of information — all risk-creating activities.

Often, they write policies and procedures that make doing useful work, let alone innovating new and better ways of working, aggravating enough that many employees won’t see a reason to bother. So your first step is to keep your own perspective in balance.

Your second: Don’t be too successful.

To illustrate with an example: The business refuses to upgrade a seven-year-old server farm. You have a talented staff, adept at keeping them running through a combination of duct tape, memory juggling, and day-to-day ingenuity. You’re proud the business experiences no disruption. Right up until the day the whole farm fails catastrophically.

Better to have had a succession of small, visible outages. When each happens, explain that as the servers age they’re more likely to fail. The business impact this time was x dollars in unnecessary costs and y dollars in lost revenue. Next time could be worse.

You’re converting risk, which they don’t care about, into revenue and cost, which they do.

Risk turns you into a meteorologist. At the beginning of the day you figure the odds: There’s a 60% chance of rain. At the end of the day, either raindrops kept falling on everyone’s head or they didn’t. Meteorologists receive frequent ridicule for this reason.

Welcome to their world.

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