The history of risk management is also a history of the colour coding of levels of risk.

Should a very, very high risk be red or should it be something different to red because we usually use red to signify a high risk … and actually … who was it that decided that colouring of risks was a good idea in the first instance.  At McLeod Governance we have always been challenged by the use of colour coding of risks and ratings. Let us be clear, we are a great fan of colour coding as it draws the readers eyes to what you really want them to understand.

Equally, however, colour coding has its failings.

The best way to illustrate those failings is to drive down the road of history of the invention on which nearly all risk management colouring systems is based – the humble traffic light.

On 10 December 1868, the first traffic lights were installed outside the British Houses of Parliament in London, by the railway engineer J. P. Knight. They resembled railway signals of the time, with semaphore arms and red and green gas lamps for night use. The gas lantern was turned with a lever at its base so that the appropriate light faced traffic.

Unfortunately, it exploded on 2 January 1869, injuring the policeman who was operating it.

The modern electric traffic light is an American invention.

As early as 1912 in Salt Lake City, Utah, policeman Lester Wire invented the first red-green electric traffic lights.

On 5 August 1914, the American Traffic Signal Company installed a traffic signal system on the corner of East 105th Street and Euclid Avenue in Cleveland, Ohio. It had two colors, red and green, and a buzzer, based on the design of James Hoge, to provide a warning for color changes. The design by James Hoge allowed police and fire stations to control the signals in case of emergency.

The first four-way, three-color traffic light was created by police officer William Potts in Detroit, Michigan in 1920.

The first interconnected traffic signal system was installed in Salt Lake City in 1917, with six connected intersections controlled simultaneously from a manual switch. Automatic control of interconnected traffic lights was introduced March 1922 in Houston, Texas.

The colour of the traffic lights representing stop and go are likely derived from those used to identify port (red) and starboard (green) in maritime rules governing right of way, where the vessel on the left must stop for the one crossing on the right.


Thankfully risk management colour codings are unlikely to explode causing injury to their operator .. but having said that … calling a risk out as green when the risk should be categorised as a red risk can cause injury to one’s organisation.

Of greater interest however from the annals of traffic light history is that in a relatively short time after its invention, those entrusted with its perfection, decided that the warning systems need to be interconnected and automated.

Interconnected. Automated.

Only of recent times have risk management warning systems mastered the automated side of things.

On the interconnected side … we are still waiting.

To go back to our original observation – if a very, very high risk is a red risk … then what is a high risk surrounded (ie interconnected) by other high risks – is that a red too? And how do we distinguish between those two types of red risks?

We still have a way to go before we get those warning lights working well!

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