Hillson Murray-webster Slides

DEFENCE PROJECT MANAGEMENT 2007 MEETING THE CHALLENGES OF TODAY; PREPARING FOR THOSE OF TOMORROW

Understanding and managing risk attitude

Dr David Hillson FRSA FIRM

Ruth Murray-Webster MBA

Director, Risk Doctor & Partners

Director, Lucidus Consulting © 2007 David Hillson/Ruth Murray-Webster, Slide 1

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 © 2007 David Hillson/Ruth Murray-Webster, Slide 2

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Understanding risk attitude

© 2007 David Hillson/Ruth Murray-Webster, Slide 3

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 risk ?” (objectives)

„

Affected by perception … “How

uncertain? How much does it matter?” © 2007 David Hillson/Ruth Murray-Webster, Slide 4

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What is “attitude”? „

Two definitions: 1. 2.

„

State of mind in relation to a fact or situation 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 © 2007 David Hillson/Ruth Murray-Webster, Slide 5

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 ???] © 2007 David Hillson/Ruth Murray-Webster, Slide 6

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What is “risk attitude”? „

“Risk Attitude” = “Risk” + “Attitude” …“Chosen response to uncertainty that matters, influenced by perception”

„

Risk attitude operates at many levels: … individual,

„

groups, society, nations …

Risk attitude exists on a spectrum © 2007 David Hillson/Ruth Murray-Webster, Slide 7

COMFORT LEVEL

RISK SEEKING

EXTREME HIGH

LOW

LOW

ZERO

ZERO

LOW

LOW

RISK TOLERANT

HIGH

HIGH EXTREME

RISK AVERSE

RISK PARANOID

short-term

EXTREME

RISK NEUTRAL

DISCOMFORT LEVEL

HIGH

RESPONSE TO UNCERTAINTY

DISCOMFORT LEVEL

EXTREME

COMFORT LEVEL

RESPONSE TO UNCERTAINTY

RISK ADDICTED

long-term

© 2007 David Hillson/Ruth Murray-Webster, Slide 8

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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

© 2007 David Hillson/Ruth Murray-Webster, Slide 9

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) © 2007 David Hillson/Ruth Murray-Webster, Slide 10

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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 „

© 2007 David Hillson/Ruth Murray-Webster, Slide 11

Managing risk attitude

© 2007 David Hillson/Ruth Murray-Webster, Slide 12

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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 attitude must can be managed ! … but HOW ? © 2007 David Hillson/Ruth Murray-Webster, Slide 13

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 © 2007 David Hillson/Ruth Murray-Webster, Slide 14

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The 4 A’s Basic steps to Emotional Literacy 1. Recognise emotions Awareness …

…and acknowledge them as entirely natural

2. Understand emotions Appreciation …

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

3. Appropriately express emotions Assertion …

…in a way that supports your objective

4. Deal with emotions …

Action

Don’t have to be a victim © 2007 David Hillson/Ruth Murray-Webster, Slide 15

Using the 4 A’s to manage risk attitude „

Awareness …

„

Appreciation …

„

More than understanding, respect for differing views as a basis for engaging and changing if necessary

Assertion …

„

Of how your perception, or others’ perception of a risky situation will shape risk attitude and behaviour

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’ © 2007 David Hillson/Ruth Murray-Webster, Slide 16

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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 cultural sameness, national cultural differences „

Great facilitation can help undercover bias in a non-threatening way © 2007 David Hillson/Ruth Murray-Webster, Slide 17

Practical steps 2 „

Appreciation of self and others … Empathy

for others’ point of view … Confidence in your own (but not overconfidence that blinds you) „

Use the data you have to reduce subjectivity, consider the value of spending time and money to get information. Yet recognise that some risk assessment is always subjective, some things that matter can’t be modelled in tangible units? © 2007 David Hillson/Ruth Murray-Webster, Slide 18

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So what ?

© 2007 David Hillson/Ruth Murray-Webster, Slide 19

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 © 2007 David Hillson/Ruth Murray-Webster, Slide 20

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RISK ATTITUDE IGNORED

UNDERSTOOD

& UNMANAGED & MANAGED

CRITICAL SOURCE OF FAILURE

CRITICAL SUCCESS FACTOR

CSF LOW

HIGH

RISK MANAGEMENT EFFECTIVENESS

© 2007 David Hillson/Ruth Murray-Webster, Slide 21

Summary „

Risk is managed by people not robots … Risk

attitudes are vital … Individual & groups … Affected by perception „

Awareness Ö understanding Ö management … “Know

thyself ”

„

Use emotional literacy to manage risk attitude

„

Only then will risk management & decision-making be fully effective © 2007 David Hillson/Ruth Murray-Webster, Slide 22

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Further details are in David & Ruth’s book, “Understanding & Managing Risk Attitude ” Gower, 2007, ISBN 978-0-566-08798-1

Visit www.risk-attitude.com for 25% discount © 2007 David Hillson/Ruth Murray-Webster, Slide 23

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 © 2007 David Hillson/Ruth Murray-Webster, Slide 24

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