Reducing risk in the decision-making process

Many organisations traditionally use a top-down approach. Leaders are expected to lead from the front, to make decisions and set wider goals that are communicated to the business. But does this approach increase the risk that management might itself make the wrong decisions — especially given that Covid-19 has created considerable short term uncertainty and longer term challenges for businesses?

Decision making in a less hierarchical structure

At our virtual conference, we looked at the role of a leader and their ability to make more informed decisions, enabling their organisation to evolve in the most effective way.

Former Royal Marine, Gareth Tennant, talked about his experiences in some of the world’s toughest and most complex environments — making decisions in times of confusion and uncertainty. During a training exercise leading a troop of marines in the Arctic Circle, Gareth realised that he was completely lost. Gareth knew that he had two options. He could rely on the notion that, because he was a leader, he was the best placed person to solve the problem. Or he could ask his team for help, recognising many of them were far more experienced than he in Arctic navigation. Gareth chose the latter approach.

We can view organisations as spheres of influence rather than in the traditional top-down, hierarchical sense. That is, they have a solid core – with a clear vision, strategic direction, corporate goals and the like. In the middle ideas and plans are adapted and refined, and cross-functionality is enabled.

But out toward the edge of the sphere, we can empower employees to monitor conditions, engage, respond and provide insights. Input from multiple levels across an organisation is considered in the decision making process.

Effective decision making requires an acceptance of short term risk, in order to achieve the longer term objectives of the wider organisation at its core.

Unlocking the shared wisdom of the group

At the conference we also heard from Louis Rosenberg, who has developed a new form of artificial intelligence (AI) based on the biological principles of Swarm Intelligence, which uses nature as its inspiration.

This technology brings people together to gather insights and unlock the collective intelligence of the group and collaborate on a decision. It empowers groups to deliver the optimal outcome for an organisation. Barnett Waddingham uses a Swarm Artificial Intelligence (AI) interactive platform to help clients amplify the knowledge and wisdom of their teams, as part of our real time decision analytics offering.

Executives need to adapt their leadership and management styles, in order to build resilient and adaptive organisations. People are the unique fabric of an organisation – its DNA – and it is people who can push an organisation forward more than leaders can on their own.

The risk involved in the act of decision making can be reduced if, instead of leaders acting in isolation, employees are supported, trained and empowered to make these decisions — providing optimal outcomes for an organisation.

If you would like to know more about the topics discussed in this article, we can help. Please get in touch.

Author: Nick Griggs, Partner and Head of Employer Consulting, Barnett Waddingham.

 

The views express in this piece are the author’s own and do not represent the official position of IRM.

 

  • About Enterprise Risk Magazine

    Enterprise Risk Magazine is the leading quarterly title for risk managers and enterprise risk, with a print circulation of over 5,500.

    Enterprise Risk is published on behalf of the Institute of Risk Management (IRM). The majority of IRM members receive their copy of Enterprise Risk at their home address, meaning the title... Read more
  • Categories

  • Tags