Intuition & BRiskManag

7/31/2019 Intuition & BRiskManag

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Intuition as a Critical Success Factor in

Business Risk Management

Department of Business Psychology

College of Economics & Social Development

Institute of Business Management

Support & Guidance by

The Administration & Faculty

By Dr. Linah AskariAssistant Professor, Psychology


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Abstract


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ObjectiveRisk management is attempting to identify and thenmanage threats that could severely impact or bring downthe organization. Generally, this involves reviewing

operations of the organization, identifying potentialthreats to the organization and the likelihood of theiroccurrence, and then taking appropriate actions toaddress the most likely threats. Our objective is to explorethe relationship between them and provide insight todecision makers in business to use the power of theirintuition (intuitive thinking / intuitive intelligence) in anoptimal way. With experience, practice and wisdom theywould be able to blend their intuitive styles in personaland professional life for Effective Business Risk

Management.


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Introduction


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Intuition and Risk Management

According to Hillson (2007), we should combine intuition with a morerational approach, to get the best of both worlds. This involves the following:* Listen - Use intuition to validate the outputs of our decision-making andrisk processes.* Learn - Seek to capture the embedded knowledge of experts, and make itavailable for others.* Grow - Develop our own intuitive skills through practice and feedback.

Wikipedia (2010) defines that, Intuition is the knowledge gained by theuse of faculty (power, ability) of knowing or sensing (through eightsenses); a perceptive insight, it may also be known as guidance andcommunication for the human beings by the creator. On the other hand,

business risk management is the identification, assessment, andprioritization of risks in business.


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Douglas (2009) defines, Risk management is theidentification, assessment, and prioritization of risks

followed by coordinated and economical application ofresources to minimize, monitor, and control the

probability and/or impact of unfortunate events.Riskscan come from uncertainty in financial markets,

project failures, legal liabilities, credit risk, accidents,natural causes and disasters as well as deliberateattacks from an adversary.


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1. Symbolic and Imaginal Processes

2. Direct and Psychic Experiences

3. Sensory and Feeling Modes

4. Empathetic Identification5. Through Our Wounds

(Blends of Intuitive Styles)


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.*Michael Eisner, Former CEO of the WaltDisney Company states, "Balanced emotionsare crucial to intuitive decision making."

* Donna Karan, Fashion designer , "One ofour greatest gifts is our intuition. It is a sixthsense we all have we just need to learn to

tap into and trust it."

Literature Review


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The Case Study researches reveal;* Masaru Ibuka, Founder and chairman of

Japan's Sony Corp was asked in an interview,

"What is the secret of your success?" He said hehad a ritual. Preceding a business decision, hewould drink herbal tea. Before he drank, heasked himself, "Should I make this deal ornot?" If the tea gave him indigestion, he

wouldn't make the deal. "I trust my gut, and Iknow how it works," he said. "My mind is notthat smart, but my body is."

Literature Review


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* Doug Greene, Chairman of New HopeCommunications acknowledge, "If I don't feelgood in my stomach about a decision, I don'tcare if the numbers say we're going to make abillion dollars. That's how important intuition

is to me. It's an actual feeling either way. Whenit doesn't feel good, it's just like a stomachacheor a nervous stomach and when a decision feelsright, it's like a great meal."

Literature Review


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In order to determine the relationship between intuition styles and effective

business risk management we took a sample of243 male and 77 female decisionmaking personnel within the firms of Korangi Association of Trade andIndustry(KATI),which represents more than 2500 industrial, commercial andservice units in Karachi. The good response rate was seen, as we approached 410personnel and in turn received 320 responses. The survey method was used tosolicit information from the respondents, which is popular in an organizationalsetting, and according to Frey, Botan, Friedman and Kreps (1991), it enables theresearcher to learn about the characteristics of a large population and to gatherinformation from respondents representing a specific population about their

values, decision making, attitudes, behavior patterns and beliefs.

Each personnel was required to fill up the following questionnaires;1. Intuition Questionnaire by Rosemarie Anderson (2007) at

[email protected]://www.wellknowingconsulting.org/index.html

2. Business Risk Management Questionnaire developed by Sullivan and Streater(1999)http://www.audit.nsw.gov.au/publications/questionnaires/RiskSurveyInstrument.pdf
http://www.wellknowingconsulting.org/index.htmlhttp://www.wellknowingconsulting.org/index.htmlhttp://www.wellknowingconsulting.org/index.htmlhttp://www.audit.nsw.gov.au/publications/questionnaires/RiskSurveyInstrument.pdfhttp://www.audit.nsw.gov.au/publications/questionnaires/RiskSurveyInstrument.pdfhttp://www.audit.nsw.gov.au/publications/questionnaires/RiskSurveyInstrument.pdfhttp://www.audit.nsw.gov.au/publications/questionnaires/RiskSurveyInstrument.pdfhttp://www.audit.nsw.gov.au/publications/questionnaires/RiskSurveyInstrument.pdfhttp://www.audit.nsw.gov.au/publications/questionnaires/RiskSurveyInstrument.pdfhttp://www.wellknowingconsulting.org/index.htmlmailto:[email protected]


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Each respondent was required to fill up the Intuition Questionnaire

developed by Rosemarie Anderson (2007). This questionnaire is used to helpan individual to identify the strength of their five Intuitive Styles, on a Likert-scale (with the scoring of never=1, seldom=3 and always=5), from which peoplecan identify and refine any one as their own preferred style and develop othersto enhance their current intuitive skills for themselves in personal andprofessional areas. The intuitive styles are; i) symbolic and imaginal processes,

ii) direct and psychic experiences, iii) sensory and somatic modes,iv) empathic identification, andv) through your wounds.

The Business Risk Management Questionnaire developed by Sullivan andStreater (1999) is divided into the following segments: a) organizational

culture and support, b) risk management policy, c) organizational objectives,d) risk identification, e) risk analysis, evaluation and treatment, f) riskmonitoring and review & g) effective risk management. Questions focus onhow the company identifies and communicates about risk, utilizes effectiveprocesses to manage risks across the enterprise, and supports thoseprocesses with a business risk management infrastructure.

Methodology


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Critical values for the levels of intuition on Anderson questionnaire are;Less use of intuition = scores from 30 70

Average use of intuition = scores from 71 110Higher use of intuition = scores from 111 150

Critical values for the levels of effective business risk management onSullivan and Streater questionnaire are;

Ineffective business risk management = scores from 65 150

Average business risk management = scores from 151 230Effective business risk management = scores from 231 315

Targeting of the participants was based on the following formula:H = N..(1) n = __N____

1+N (e)2

Where n is the sample size, N is the population size and e is the level ofprecision with a 95% confidence level and a position of (+ 5 percent) i.e. P =

.05n = 2500________ = 320 participants

1 + 2500 (.05)2


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Correlations

Intuition

Business

RiskMana

gement

Intuition Pearson

Correlation

1 .392**

Sig. (2-tailed) .000

N 320 320

BusinessRiskMan

agement

Pearson

Correlation

.392** 1


N 320 320

**. Correlation is significant at the 0.01 level (2-tailed).

Model Summaryc,d

Model R R Squareb

Adjusted R

Square

Std. Error of the

Estimate

Change Statistics

Durbin-Watson

R Square

Change F Change df1 df2 Sig. F Change

1 .889a .790 .790 98.53968 .790 1202.801 1 319 .000 2.679

a. Predictors: Intuition

b. For regression through the origin (the no-intercept model), R Square measures the proportion of the variability in the dependent variable about the origin explained by

regression. This CANNOT be compared to R Square for models which include an intercept.

c. Dependent Variable: BusinessRiskManagement

d. Linear Regression through the Origin


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Hypothesis 2: Use of Intuition is positively

correlated with Effective Business Risk

Management in Males as compared to Females.Correlations

IntuitionMales BRMMales

IntuitionMales Pearson Correlation 1 .791**


N 243 243

BRMMales Pearson Correlation .791** 1


N 243 243

**. Correlation is significant at the 0.01 level (2-tailed).

Model Summaryc,d

Model R R Squareb Adjusted R Square

Std. Error of the

Estimate

Change Statistics

Durbin-WatsonR Square Change F Change df1 df2 Sig. F Change

1 .849a .722 .721 38.06502 .722 7448.899 1 242 .000 2.522

a. Predictors: IntuitionMales

b. For regression through the origin (the no-intercept model), R Square measures the proportion of the variability in the dependent variable about the origin explained by regression. This CANNOT be compared to R Square for models which include an

intercept.

c. Dependent Variable: BRMMales



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Correlations

IntuitionFemales BRMFemales

IntuitionFemales Pearson Correlation 1 .290*


N 77 77

BRMFemales Pearson Correlation .290* 1


N 77 77

*. Correlation is significant at the 0.05 level (2-tailed).

Model Summaryc,d

Model R R Squareb Adjusted R Square

Std. Error of the

Estimate

Change Statistics

Durbin-WatsonR Square Change F Change df1 df2 Sig. F Change

1 .743a .552 .546 146.33371 .552 93.663 1 76 .000 2.226

a. Predictors: IntuitionFemales

b. For regression through the origin (the no-intercept model), R Square measures the proportion of the variability in the dependent variable about the origin explained by regression. This CANNOT be compared to R Square for models which include

an intercept.

c. Dependent Variable: BRMFemales



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Linear Correlations**. Correlation is significant at the 0.01 level (2-tailed) & *. Correlation is significant at the 0.05 level (2-tailed).

Variables BusinessRisk

Management-

Organizational Culture

and Support

BusinessRisk

Management- Risk

ManagementPolicy

BusinessRisk

Management-

Organizational Objectives

BusinessRisk

Management- Risk

Identification

BusinessRisk

Management- Risk

Analysis,Evaluation

andTreatment

BusinessRisk

Management- Risk

Monitoringand Review

BusinessRisk

Management- Effective

RiskManagement

Intuition -

Symbolic andImaginal

Processes.698**

.768**

.367*

.253

.196

.311

.197

Intuition -Direct andPsychic

Experiences.378* .593** .632** .183 .324 .219 .106

Intuition -

Sensory andSomaticModes

.165 .237 .547** .367* .174 .598** .283

Intuition -Empathetic

Identification.213 .142 .382* .772** .115 .596** .291

Intuition -Through Your

Wounds.256 .119 .245 .196 .689** .431* .624**

Results of Hypotheses 3 - 7


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Regression Analysis: Magnitude of the Determinant R square X 100 shows the % of influence of

Intuition styles upon the factors of Business Risk Management

Variables BusinessRisk

Management-

Organizational Culture

and Support

BusinessRisk

Management- Risk

ManagementPolicy

BusinessRisk

Management-

Organizational Objectives

BusinessRisk

Management- Risk

Identification

BusinessRisk

Management- Risk

Analysis,Evaluation

andTreatment

BusinessRisk

Management- Risk

Monitoringand Review

BusinessRisk

Management- Effective

RiskManagement

Intuition -

Symbolicand ImaginalProcesses

75.8% 84.3% 58.9% 35.9% 28.7% 51.6% 26.5%

Intuition -Direct andPsychic

Experiences51.4% 68.5% 79.7% 29.5% 46.5% 33.6% 31.7%

Intuition -

Sensory andSomaticModes

23.7% 31.8% 67.1% 50.8% 24.8% 81.8% 34.2%

Intuition -Empathetic

Identification29.8% 22.3% 52.6% 82.3% 21.7% 73.7% 35.7%

Intuition -Through

Your Wounds43.7% 21.5% 38.9% 25.4% 80.6% 58.3% 74.8%

Results of Hypotheses 3 - 7


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Hypothesis 3: Intuition style, symbolic and imaginal

processes has the highest value in correlation with

effective business risk management for;

a) Organizational culture and support.698** /75.8%

b) Risk management policy.768** /84.3%


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Hypothesis 4: Intuition Style direct and psychic experiences

has the highest value in correlation with effective business

risk management for;

a) Risk management policy .593** / 68.5%

c) Organizational objectives .632** / 79.7%


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Hypothesis 5: Intuition Style sensory and somatic modes

has the highest value in correlation with effective

business risk management for;c) Organizational objectives .547**/ 67.1%

f) Risk monitoring and review .598** / 81.8%


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Hypothesis 6: Intuition style, empathetic identification

has the highest value in correlation with effective business

risk management for;

d) Risk identification .772** / 82.3%

f) Risk monitoring and review .596** / 73.7%


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Hypothesis 7: Intuition Style Through Your Wounds has

the highest value in correlation with effective business risk

management for;e) Risk analysis, evaluation and treatment .689 **/ 80.6%

g) Effective risk management .642**/ 74.8%


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I deeply thank Almighty Allah, Shahjahan SyedKarim, Ms. Sabina Mohsin, Talib Syed Karim, JawedAkbar Ansari, psychologists and students helped in

compiling the data, the Administration andColleagues of the Institute of Business Managementand my family for their Guidance and Cooperation in

publishing and presentation of the paper.


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Intuition & BRiskManag