Decision Making / 7 / 7.6

7.6 NAVIGATING THE RISK-MANAGEMENT PROCESS AND MAKING THE ‘RIGHT’ DECISIONS

In writing this book, a clear decision was taken to first build an appreciation of the nature of risks and how managers and stakeholders perceive those risks, the latter being embedded in attitudes of individuals and in organisational cultures. We must remain aware of the need to investigate how stakeholders perceive risks, how individual attitudes and organisational culture might impact when it comes to making decisions and managing risks.

It is now that we have a sound understanding of the nature of risky situations, risks and management thinking that we can competently navigate the risk-management process and be confident of making the right decisions as we take this journey. We are now well equipped to appreciate the risk-management process that is described shortly. However, before taking a detailed look at the risk-management process, it is helpful to consider how this process is one special case of a more generic process we apply as we go about making decisions about complex problems.

Much of the literature on problem solving and contemporary risk-management process are founded in problem solving methodologies that have been evolving for many years. The literature can be criticised because it frequently starts with a proposition that the problem is given and well understood. It is also frequently suggested that there is a clear starting point and a definitive set of alternatives available and criteria upon which we might judge those alternatives.

The early chapters demonstrated that in practice it is most unlikely that any problem will present itself in a clear and readily comprehended manner. Further, as described in the preceding sections, there will be many cultural and other forces militating against both discovering the problem and rectifying it.

Any process we design to deal with messy problems in organisation and, particularly, those involving significant risks will have to involve several stages. Further, whilst delineation between stages may be unclear in practice, they will generally involve problem structuring or conceptualisation, model building and using that model (or models) to inform and challenge thinking, determining action plans or remedial strategies and, ultimately, monitoring to see what has been achieved.

Any strategy formulated may take a variety of forms. A choice may be taken to implement a specific strategy, policy or plan. A set of corrective actions may be recommended for others to put in place. A procedure may be instituted with the intent of monitoring what is going on, that is, maintaining a watching brief on the situation we have identified as problematic.

Roughly speaking, there are three key phases of problem solving, which relate to the risk-management process as shown in Table 7-3.

Table 7-3. Relationship Between Problem Solving and Risk-management Processes