The Softer Side of Risk Management
Everyone feels differently about risk. In this video presentation, we explore how individual perceptions influence risk analysis and decisions.
Practitioners of risk management are trained to analyze risk using severity and probability. Severity is a measure of how bad the outcome could be and probability is how likely it is going to happen. Note that we are limiting the current context of risk to a negative outcome, such as physical harm or financial loss. In a broader sense, risk could have either a positive or a negative outcome. In the context of medical device risk management, we lean on ISO 14971, which defines risk (of harm) as a combination of the severity of harm and probability of occurrence of that harm.
As much as we try to use a quantitative and objective approach, the reality is that we often find it hard to reach consensus in a team on analyzing risks (i.e. estimate the risk level) and evaluating risks (i.e. if the risk level is higher or lower than a threshold). Some of us are extremely cautious, while others not so much. Some focus exclusively on the outcome, and generally imagine the most severe outcome for every potential harm, while others are sensitive to the occurrence.
We did a fun activity during our video presentation with a live audience of about 50 people. We showed a photo of a common activity for 20 seconds and asked the audience to rate it as either “high risk” or “low risk”. The results were fascinating! Take a look at the graphic below, where red bars for each photo indicate the number of “high risk” responses, and blue bars indicate the number of “low risk” responses. Grey bars reflect the number of people who could not enter a rating during the 20s time frame.
A lot of research has been done on risk perception and how social and cultural factors shape our attitudes about risk and uncertainty. We discuss this in great detail with additional examples during this video presentation, and offer these insights:
Perception of risk is different for each individual
Imagery and narrative can distort the sense of probability and impact
Individuals are likely to attend selectively to information in a way that reinforces rather than undermines their deeply held beliefs
Evaluate of risk-benefit is influenced by affect
When intense emotions are engaged, the outcome is the only focus
Organizational culture influences group perceptions and moderates individual positions
How can we use these insights to better manage our risk management process? It may be tempting to treat individual differences as bias and try to suppress it through both overt and indirect techniques. Our view is that diversity in individual perceptions of risk offers a great opportunity for a more thoughtful, rigorous approach. However, it will work only if we learn how to harness its power. We need to create an environment where diverging viewpoints can be freely discussed and evaluated to facilitate a more desirable and effective solution.
Practitioners of risk management not only need to be competent in technical and regulatory requirements; they must also be good facilitators who can draw the best out of every team member. This is how we can promote a risk culture that drives consistent and effective risk-based decisions throughout the organization.
Note: Slides accompanying the video presentation are available here.
References:
Paul Slovic - The Feeling of Risk: New Perspectives on Risk Perception; Published by Earthscan ISBN 978-1-84971-149-4
Check out these related articles on LinkedIn:
Risky or Not?, September 2019
Risk is a Personal Thing, July 2019
Dangerous Does Not Equal Unsafe, February 2019