Tips for Decision Making and Risk Management During the COVID Crisis

Tips for Decision Making and Risk Management During the COVID Crisis

The COVID crisis is unprecedented.  For the foreseeable future, we will have to make decisions under a great deal of uncertainty, in an unsettling new context, working remotely with our teams, all while being bombarded with news that shifts by the hour.  A recent article from the BBC noted that the COVID-19 crisis contributes to decision fatigue and a related type of burnout that we are not used to.

This article is intended to help alleviate decision fatigue with insights into decision making under uncertainty, suggestions to manage risk as you make decisions, and tips to improve decision making with your team.

Decision Making Under Uncertainty

Hugh Courtney, professor of international business and strategy at Northeastern University, developed a framework for determining the level of uncertainty surrounding strategic decisions.  It provides practical guidance that leads to more informed and confident decision making.  The framework describes four levels of uncertainty and provides suggestions to help make decisions for each level.    The framework is intended to reduce the risk that decision makers will see outcomes as either certain or completely unpredictable.

Level I – Clear Enough Future

A single forecast of the future

  • Carefully evaluate the single available forecast
  • Decide based on your analysis of the single potential outcome
Level II – Alternative Futures

A few possible outcomes of the future

  • Identify the probability of each possible outcome occurring
  • Evaluate each possible outcome
  • Decide based upon probability that each outcome will occur and your analysis of each outcome
Level III – Range of Futures

A range of possible outcomes

  • Develop only a limited number of scenarios, restricted to those you think are probable – do not identify all possible scenarios
  • Avoid redundant scenarios
  • Identify the outcome that you believe to be most optimal for your organization
Level IV – True Uncertainty

No basis to forecast the future

  • Avoid acting on gut instinct alone
  • Document what you know and what is possible to know
  • Identify variables that could impact outcomes over time
  • Adapt decision as new information comes available

Managing Risks

Risks arise as part of the decision-making process.  To help identify and manage risks, consider the following questions as you make key decisions:

  • What are you trying to do? (objectives)
  • What might affect you, good or bad? (risks)
  • Which of the things that might affect you are most significant? (risk assessment)
  • Of the most significant things that could go wrong, what are you going to do about them? (risk treatment)
  • Did what you decided to do work? (risk treatment follow-up)
  • What has changed? (identification of new or emerging risks)

Tips to Improve Decision Making with Your Team

Al Pittampalli is a data scientist and contributor to the Harvard Business Review.  He identified the following five stages of problem solving:

  • Define the problem
  • Generate solutions
  • Evaluate solutions
  • Pick a solution
  • Make a plan

When we make decisions, we move from one stage to the other randomly.  This is called intuitive problem solving and we don’t realize we are doing it.  Now imagine a remote team meeting where each of the participants is moving through this unsystematic approach to problem solving and it becomes evident why it is hard to make group decisions.

To reduce the impact of this problem, Pittampalli suggests the concept of a methodical meeting where each agenda item is aligned with a stage in the decision-making process and with a measurable outcome, as illustrated by the following examples:

Agenda Item Problem Solving Stage Outcome
Discuss member retention issue Define the Problem Problem statement
Identify a venue for annual conference Generate Solutions List of potential venues
Renew cell phone plan Evaluate Solutions List of strengths and weaknesses of service providers
Choose a new website developer Pick a Solution Decision on new website developer
Implement new sales strategy Make a Plan Action plan – tasks/owners/due dates

This approach requires a little more up-front work in preparing the meeting agenda, but this extra effort should result in a more efficient meeting that achieves measurable outcomes.

 

 

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Francis Liska
CEO OTUS Group | OTUS Group
Francis is a Chartered Professional Accountant, Certified General Accountant, Certified Information Systems Auditor, Certified Internal Control Auditor and a Certified Management Consultant. He holds a degree in Business Administration from Cape Breton University and a Post Graduate Diploma in Applied Information Technology. He has also completed graduate studies in decision analysis at Carleton University.

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