Risk can be defined as the effect of uncertainty on possible outcomes. This means every decision, at every level of the organisation, has some level of risk to it. Effective decision-making lies at the heart of managing risk. And managing risk, now more than ever, is the responsibility of every individual within an organisation.
Unfortunately, traditional risk management approaches and systems are often ineffective when it comes to getting individuals to make good decisions. Read more to find out why!
While these systems may have been effective during the industrial age, they are proving to fail in today’s highly volatile, uncertain, and complex environment. Central, top-down decision making is no longer an option.
And if you don’t think today’s environment is highly volatile, I urge you to consider that the first three months of 2020 has seen several Black Swan events, including bushfires, floods, royal inquiries and, of course, COVID-19.
Being in business during March of this year can be likened to tap-dancing on top of a volcano during an earthquake – exciting, the view is interesting, but a wrong step could prove fatal, and everybody feels like their feet are starting to burn…
Decision making on an organisational level throughout these black swan events range from dismal to outstanding. Those organisations that are Presilient®, risk intelligent and agile managed to pivot as required, adapt and innovate to find opportunities in these events. This is key in order to become a high-reliability organisation (here is one such example).
… and it is virtually impossible if individuals within the organisations do not understand, or don’t effectively practice, personal safety.
Don’t believe me? Here are a couple of things for you to consider:
- Would you entrust a company credit card to someone who opens up and replies to emails from an unknown bank saying they won a million-dollar inheritance from an uncle they never met?
- Would you trust a safety officer at work who lost his license for reckless driving?
- Would you trust a financial manager who lost all his money gambling?
Everything starts at home!
We make decisions all day, every day. From the second we wake up until the second we fall asleep, we make decisions. And every decision, as stated at the beginning, carries with it a certain amount of risk.
We make decisions with regards to our personal lives.
We make decisions with regards to our online interactions.
We make decisions with regards to our work life.
So here is you mission, if you choose to accept it: Take some time and reflect on how these intersect and overlap in your life, whether that has an effect on productivity and overall quality of life, and how it can be managed better!
Next, learn more about the different roles we play when making decisions.