Hillson Murray-Webster Slides

8/13/2019 Hillson Murray-Webster Slides

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2007 David Hillson/Ruth Murray-Webster, Slide 1

Understanding and

managing risk attitude

Dr David Hillson FRSA FIRMDirector, Risk Doctor & Partners

Ruth Murray-Webster MBA

Director, Lucidus Consulting

DEFENCE PROJECT MANAGEMENT 2007

MEETING THE CHALLENGES OF TODAY;

PREPARING FOR THOSE OF TOMORROW


People & the risk process

The Critical Success Factor!

People are responsible for :

setting risk acceptability thresholds

identifying risks (threats & opportunities)

assessing probability & impacts

proposing appropriate responses

implementing agreed actions

All affected by risk attitude


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Understanding

risk attitude


What is risk?

Uncertainty that matters

Any uncertain event or set of

circumstances which, if it occurs, will

have a positive or negative effect on

achievement of one or more objectives

Only defined in relation to something specific

What is at r isk? (objectives)

Affected by perception

How uncertain? How much does it matter?


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What is attitude?

Two definitions:

1. State of mind in relation to a fact or situation

2. Orientation of axes in relation to a reference plane

People and aeroplanes:

Direction of lean chosen to achieve desired outcome

Attitude motion, choice must be followed by action

Various components of attitude (pitch/roll/yaw)

Multiple options in given situation, no right answer

May have preferred default option but can still choose


What is attitude?

Chosen response to given situation

Only defined in relation to something specific Attitude towards what?

Affected by perception of situation

What do I think it is?

[Does this sound familiar ???]


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What is risk attitude?

Risk Attitude = Risk + Attitude

Chosen response to un certainty that

matters, inf luenced by percept ion

Risk attitude operates at many levels:

individual, groups, society, nations

Risk attitude exists on a spectrum


RESPONSETOU

NCERTAINTY

DISCOMFORTLEVEL

COMFORTLEVEL

EXTREME

HIGH

LOW

ZERO

LOW

HIGH

EXTREME

RESPONSETOUNCERTAINTY

COMFORTLEVEL

DISCOMFORTLEVEL

EXTREME

HIGH

LOW

ZERO

LOW

HIGH

EXTREME

RISK

PARANOID

RISK

ADDICTED

RISK

AVERSE

RISK

TOLERANT

RISK

SEEKING

RISK

NEUTRAL

short-term long-term


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Where are you on the risk attitude spectrum?

It depends

On

external environment (situation)

internal environment (me/us)

And where should you be?

It depends On

objectives


Risk management & decision-making

Both involve uncertainty The problem with the future is that more things might

happen than will happen (Plato)

Both matter Decision-making is the primary task of any manager

(Drucker)

Zero risk is neither possible nor desirable Appropriate risk-taking must be followed by effective

risk management (Hillson & Murray-Webster)


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Defence Values for Acquisition:some links to appropriate risk-taking

Allow space for innovation

Put risk where it can be managed most

effectively

Value openness and transparency

avoid wasted effort Value objectivity based on clear

evidence rather than advocacy


Managing

risk attitude


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Risk attitude summary (so far) Risk attitude is:

situational (not fixed)

chosen in response to a given uncertain situation

exhibited by individuals and groups

affected by perception

Risk management is not just rational process

Risk atti tude can be managed !mus t

bu t HOW ?


Emotional Intelligence

1983, Howard Gardner Multiple intelligences

IQ = 20% of what a person can achieve?

1989 Salovey & Mayer Emotional intelligence

1990s EI popularised by Daniel Goleman

Measured as EQ

Emotional Literacy

Less well known term in business literature

Implies can be learned, nurtured, developed

Not fixed


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Basic steps to Emotional Literacy

1. Recognise emotions and acknowledge them as entirely natural

2. Understand emotions

Why do I feel them, do they help or hinder?

3. Appropriately express emotions

in a way that supports your objective

4. Deal with emotions

Dont have to be a victim

The 4 A s

Awareness

Appreciat ion

Asser t ion

Act ion


Using the 4 As to manage risk

attitude

Awareness Of how your perception, or others perception of a risky situation

will shape risk attitude and behaviour

Appreciation More than understanding, respect for differing views as a basis

for engaging and changing if necessary

Assertion Needs and issues will need to be articulated if risk attitude is to

change

Action Willingness to take action and be resilient in the pursuit of goals,

beyond good intentions


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Practical steps - 1 Awareness of self and others and sources

of bias in perception

Situational, conscious factors, e.g. familiarity

Sub-conscious heuristics or cognitive bias,

e.g. availability or optimism bias

Feelings/emotions love is blind?

Group dynamics, organisational culturalsameness, national cultural differences

Great facilitation can help undercover

bias in a non-threatening way


Practical steps 2 Appreciation of self and others

Empathy for others point of view

Confidence in your own (but not over-confidence that blinds you)

Use the data you have to reducesubjectivity, consider the value ofspending time and money to getinformation. Yet recognise that some riskassessment is always subjective, somethings that matter cant be modelled intangible units?


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So what ?


Why this is important

Risk is uncertainty that matters, must be managed

Decision-making is risky

Risk attitude is chosen response to uncertainty that

matters, affected by perception

Risk management is affected by risk attitude

Effective risk management requires risk attitudes to

be understood & managed

Emotional Literacy offers a proven effective approach


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RISKATTITUDE

C S F

RISK MANAGEMENT

EFFECTIVENESSLOW HIGH

IGNORED

& UNMANAGED

CRITICAL

SOURCE OF

FAILURE

UNDERSTOOD

& MANAGED

CRITICAL

SUCCESS

FACTOR


Summary

Risk is managed by people not robots

Risk attitudes are vital

Individual & groups

Affected by perception

Awareness understanding management

Know thyself

Use emotional literacy to manage risk attitude

Only then will risk management & decision-making

be fully effective


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Further details are in David & Ruths book,Understanding & Managing Risk Attitude

Gower, 2007, ISBN 978-0-566-08798-1

Visitwww.risk-attitude.com for 25% discount


For further information

David Hillson

Risk Doctor & Partners

Tel +44(0)7717.665222

[email protected]

Ruth Murray-Webster

Lucidus Consulting

Tel +44(0)7974.943443

[email protected]

www.risk-attitude.com

Documents

Hillson Murray-Webster Slides