Decision-making under uncertainty and time pressures

By Zlatko Vuevski, Associate Risk Culture Builder

When we think of decision-making under uncertainty and time pressures, the first thing that comes to mind is risk management. Some will say it is like a game of chess.

Chess is a game of balancing acts between threats and opportunities, defense, and attack. Chess masters and world champions Tigran Petrosian and Anatoly Karpov were renowned for their defensive skills but nonetheless deployed those skills offensively to secure victories. Similarly, attack-oriented chess champion Gary Kasparov knew the importance of strategic defense.

Just like proactivity in risk management, prophylaxis is a chess term that refers to moves that prevent the opponent from executing their plans or creating threats. Taking care of threats is one side of the coin, the other is that you must embrace the opportunities lying ahead. You must attack, if you are ever going to win a game, or achieve your objectives.

The opening moves in chess set the stage for the game, just as early risk identification shapes the trajectory of a project or business venture. In both scenarios, the key is to establish a strong (starting) position from which to manage future uncertainties.

Can you identify all the risks? Of course not. What you can do is to constantly reevaluate the risks you foresaw, and to constantly include emerging risks. You might know your strategy, your tactics, your goal (checkmate), your risks upfront. But you cannot know the strategy or tactics of your opponent/competition.

In the Middlegame, the situation changes for the better or worse with every move, emphasizing why periodic risk analyses (quarterly, annually) are not sufficient for success. It will not make you win the game. Furthermore, thinking only of mitigating measures will

put you in defense mode only, adopting the risk averse stance along the way, not taking any necessary risks, and with that, no rewards. Remember what the rewards are? Remember what the goal is? Think about risk as an opportunity too. Think about Risk Exploiting as risk response as well.

As a chess match progresses to the endgame, the focus shifts to converting a positional advantage into victory. For managers of risk, and that is everyone in the company, this stage represents the ongoing monitoring of risks and the adaptation of strategies in response to changing circumstances. Both chess players and risk managers must be nimble and need the agility to pivot their thinking and acting in line with new developments.

Then, there is the aspect of time pressure. Everyone playing the fantastic game of chess, as everyone effectively managing risk in the organization, do not have the luxury of unlimited time or all information at hand to make risky decisions, but everyone can learn how to think, act, and interact about risk, and make the risk part of their culture. Everywhere, every day.

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