Managing Your
Public Risk

September 1999

The 4th Principle of Risk: Decisions  

Reviewing the five principles of managing risk, in June, we looked at precise definitions; in July, identifying issues; in August, developing solutions. This month we’ll address decisions and next month, controls.

Risk can’t be managed without making decisions.  Decisions commit us to a course of action, and remove ambiguity, one of the key components of risk.  Of course, erroneous decisions introduce new risks.  To manage our risks, we face three decisions: assessing the seriousness of the risk, selecting the best solution(s) and determining whether the risk remains acceptable.  Each decision should be made separately, although under duress, they are usually blended, often to our detriment.

To assess seriousness, we need people who are familiar with the risk setting.  A team comprised of operational, managerial, labour and risk management staff is ideal.  A panel of five such experts provides a rich and robust diversity of viewpoints.  Risks should be assessed against previously defined severity and probability values.  The same group (or another) can also recommend solutions.   Acceptability, however, should be solely a management task.  Risks can be ranked many ways, the most common being the “Binning” method, but others are based on cost, effectiveness, politics, ethics or a composite.

Common Mistakes in Decision Making

  1.  Making a decision without forethought.

2.  Not properly ‘framing’ the decision.

3.  Failing to explicitly define the problem.

4.  Being too confident of one’s judgement.

5.  Using common but faulty rules of thumb.

6.  Using adhocracy instead of a method.

7.  Being seduced by “Group Think.”

8.  Not collecting, understanding or responding appropriately to feedback.

9.  Not keeping accurate decision records.

10. Not auditing the decision making process.


Recommended Reading for Risk Managers  

Decision Traps: The 10 Barriers to Brilliant Decision Making and How to Overcome Them, by J. Edward Russo and Paul J.H. Schoemaker.  No substitute for the more academic tomes in this field, this is an easy-to-read primer, from which the above list is drawn.  It includes a good explanation of decision framing. 

Risk Taking and Decisionmaking: Foreign Military Intervention Decisions, by Yaacov Y.I Vertzberger.  Don’t be put off by the subtitle of this dazzling book.  Dedicated “to those who care and dare,”  the first three chapters provide a superbly researched introduction to risk and two schools of thought on how risk decisions are made.  Consider the military case studies as a bonus.  Vertzberger believes risk decisions are socially and cognitively constructed, in contrast to the widely-held theory that they are the result of rational choice.  Captured in highly readable prose, his bibliography lists 500 sources!


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Risk Solutions offered by CADMUS:

Advice – candid, objective, confidential

Training – one, two, three day courses

Research – in depth risk analysis

Programs – complete loss prevention strategy

Facilitation – sound, sensible, participative solutions to organizational and public issues

Murphy spent 17 years (78-96) with Transport Canada, his last five as Regional Director General, Aviation in Winnipeg.  Originally trained as a professional pilot, he is the author of an internationally acclaimed 500-page report entitled "An Evaluation of Emergency Response Services at Airports in Canada," currently in its second revised edition (August 1999).  He is also the Chairman of the Air Passenger Safety Group (APSG), a Director of Transport 2000 Canada, a Director of the Ottawa Chapter of Christian Businessmen's Committee (CBMC) and the Secretary General of the Peugeot Club of North America (PCNA).


(Available in Word 97 by email or by fax from):

e-mail: Michael Murphy

CADMUS Corporate Solutions Limited, 
59 Queensline Drive,
Nepean, Ontario  K2H 7J4

Tel. (613) 829-0602      Fax (613) 829-6720

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