In matters of practical business operations and business management, two important concepts — the risk of decisionmaking and decisionmaking under risk — are essential knowledge for business leaders and top company officials. As they try to expand their business and increase profits, businesses have to consider, almost on a daily basis, the risk of making a certain decision, and whether or not this is the right moment to apply their knowledge of decisionmaking under risk.
In other words, decisionmaking and risk are two sides of the same coin, and if the decisionmaker cannot consider both aspects, the future of the company will be at risk. This applies to private enterprise, and governance should be no different.
The risk of decisionmaking points to the many objective and subjective uncertainties that affect a decision, as well as the possibility that a decision will not have the desired effect or consequences. That is why the question of how to minimize the risk of decisionmaking and how to make fewer flawed decisions has always been an important issue for anyone striving for success.
But what does decisionmaking under risk mean? That is when the decisionmaker knows more about the target of his decision and has a clearer goal, but the realization of that goal involves a certain amount of risk. That being so, is the target involved in the decision the right target, and are the methods used to reach the desired goal feasible? The answers to these questions are crucial to whether the risk will be controllable.
A series of big events have occurred around the world lately that serve as a good reference when we try to calculate risks for Taiwan. These events are perfect examples of how risk is normally unpredictable, although it is possible to discern very accurate internal risk patterns.
First is the Sino-Japanese relationship, which is constantly being put to the test. When Japan recently reported its balance of international payments for August, it revealed that China — which has been buying up Japanese national debt — had begun to sell off large amounts of short-term debt maturing in a year or less. In August, the amount of Japanese securities sold by China, which owns more than half of all Japanese short-term debt, exceeded the amount of Japanese securities it bought by more than ￥2 trillion (NT$820 billion).
As this coincided with the time that China was raising a ruckus because Japan and the US were holding joint military exercises in the East China Sea, some Japanese were quick to interpret the change in investment strategy as a politically motivated threat.
There’s a reason behind this interpretation. The Japanese daily Asahi Shimbun used Greece’s national debt crisis and the impact that has had on the country to point to the fact that Chinese Premier Wen Jiabao (溫家寶) promised to buy Greek national debt when he met with Greek Prime Minister Georgios Papandreou earlier this month. According to the paper, this showed how, following China’s logic, this was not a straightforward economic investment, because China always has a political goal in mind.
The newspaper also issued a “warning,” saying that given the incident in the waters off the Diaoyutai Islands (釣魚台) early last month, when a Chinese fishing boat hit two Japanese patrol boats, it would be interesting to see what Chinese investments would look like when the data for last month are published.
This is a good example of how cautious and frightened the Japanese media are when they monitor their huge neighbor as it works to improve its economic benefits and increases the security threat. The Japanese government has also confirmed that following the recent dispute over the Diaoyutais, Chinese restrictions on the export of rare earth minerals have not been relaxed, although its imports of Japanese goods have improved.
Another event that has stirred a lot of interest was the decision by the Norwegian Nobel Committee to award the Nobel Peace Prize this year to Chinese dissident Liu Xiaobo (劉曉波). While the committee is appointed by the Norwegian parliament, it is common knowledge that it is a fully independent organization. Common knowledge to everyone but China, that is.
Beijing, which apparently cannot fathom the idea that the government does not control everything, first tried to put pressure on the Norwegian government and the Nobel Committee not to give the prize to a Chinese dissident.
After the announcement was made, China’s embarrassment turned to anger and it escalated the issue into a government-level incident by summoning the Norwegian ambassador in Beijing for an official rebuke. It then canceled an official meeting on Wednesday last week with Norwegian Minister of Fisheries and Coastal Affairs Lisbeth Berg-Hansen, who was in Shanghai, and also postponed ongoing talks on a Sino-Norwegian free-trade agreement.
In China, politics, the economy and human rights are all used in the service of the Zhongnanhai leadership.
If we think blood is thicker than water when it comes to cross-strait relations and that we will not be exposed to the same treatment as Japan or Norway, then we are sorely mistaken.
At the APEC meeting of defense ministers in Hanoi, Vietnam, recently, the US and Chinese defense ministers finally met for the first time after China unilaterally suspended Sino-US military exchanges 10 months ago over US arms sales to Taiwan. When they met, the first thing Chinese State Councilor and Minister of National Defense Liang Guanglie (粱光烈) did was to bring up the Taiwan issue.
As Guan Youfei (關友飛), deputy director of the external affairs office of China’s defense ministry, told reporters after the meeting: “Minister Liang pointed out that arms sales to Taiwan were an impediment to wider and deeper bilateral [Chinese-US] defense relations.”
In Taiwan, China is the biggest external risk affecting its survival and development. All of Taiwan’s political and economic China policies are decisions made under risk. So how high is the risk of decisionmaking in Taiwan?
Based on national strength and geopolitical relations, it is clearly greater than it is for Japan or Norway. That is why a government that is incapable of carefully evaluating the risk of decisionmaking and instead rushes head-first into decision making under risk will turn its people into bargaining chips to be lost in the blink of an eye if the government misjudges the situation. Such a government is the greatest of all internal risks.
Translated by Perry Svensson
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