Risk Doctor Briefing
SERIES ARTICLE
Dr David Hillson, PMI Fellow, HonFAPM, FIRM
The Risk Doctor Partnership
United Kingdom
The idea of “risk-based decision-making” is becoming increasingly popular, and decision-makers at all levels are keen to ensure that their decisions take risk properly into account. But perhaps the term “risk-based decision-making” is mistaken. Surely all decisions are risk-based, by definition?
Whenever we encounter a situation where we need to make a decision, two vital characteristics are always present. Every decision involves uncertainty, and the outcome of every decision matters.
All decisions involve uncertainty
If there is no uncertainty in the situation, then we don’t need to make a decision. If there is only one option, then there is no need to choose. For example, we cannot “decide” whether to comply with regulatory requirements, or whether to pay our statutory taxes. If a client insists that the project will not be accepted unless we deliver one key aspect of the specification, then we do not “decide” whether to do it. Wherever we have a requirement or a constraint or an obligation that is fixed, no decision is needed. We just have to do what must be done.
Even where we have alternative options in a decision situation, if one option is overwhelmingly better than all others, the “decision” makes itself. As far as the decision-maker is concerned, it is a “no-brainer”, requiring no analysis or thought.
Uncertainty is inherent in all true decisions, requiring us to choose between different options where there is no clear best path, where the outcomes of some options are not fully known, or where we have incomplete information to support our decision. We must make the best possible decision in the situation that faces us.
All decision outcomes matter
Sometimes we’re asked to make decisions where the outcome really is not important. If it doesn’t matter which option you choose, then this isn’t really a decision that needs to be taken. For example, if we have two equally competent subcontractors who are offering the same service at the same price, we can choose either one. Project designers provide two alternative technical solutions with the same level of risk exposure, both of which can deliver the required functionality with a similar timescale and budget, and both are within the capability of our team. Just pick one, it doesn’t matter!
True decisions are required only when the outcome matters. If the survival of our company depends on whether we make a particular investment or not, or who we choose as our joint-venture partner, then we had better make the right decision. If the choice of testing strategy will determine whether or not we are able to deliver a fault-free product with confidence, we need to get it right…
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How to cite this paper: Hillson, D. (2020). Title, Risk Doctor Briefing; PM World Journal, Volume IX, Issue VI, June. Available online at https://pmworldlibrary.net/wp-content/uploads/2020/05/pmwj94-Jun2020-Hillson-all-decisions-are-risky.pdf
About the Author
Dr David Hillson HonFAPM PMI-Fellow CFIRM CMgr FCMI
The Risk Doctor
United Kingdom
Known globally as The Risk Doctor, David Hillson leads The Risk Doctor Partnership (www.risk-doctor.com), a global consultancy offering specialist risk services across the world.
David has a reputation as an excellent speaker and presenter on risk. His talks blend thought-leadership with practical application, presented in an accessible style that combines clarity with humour, guided by the Risk Doctor motto: “Understand profoundly so you can explain simply”.
He also writes widely on risk, with eleven major books, and over 100 professional papers. He publishes a regular Risk Doctor Briefing blog in seven languages to 10,000 followers, and has over 7,500 subscribers to the RiskDoctorVideo YouTube channel (www.youtube.com/RiskDoctorVideo).
David has advised leaders and organisations in over fifty countries around the world on how to create value from risk based on a mature approach to risk management, and his wisdom and insights are in high demand. He has also received many awards for his ground-breaking work in risk management over several decades.
To see other works previously published in the PM World Journal by Dr David Hillson, visit his author showcase at http://pmworldlibrary.net/authors/dr-david-hillson/
