Those lists of greatest risks all miss the BIG one

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Those lists of greatest risks all miss the BIG one

When something goes wrong, 99.999999% of the time it’s because somebody made a poor decision (at least in hindsight).

You ask the individual responsible, “What were you thinking?”

That is quickly followed by, “You weren’t thinking, were you!”

 

The BIG one, the root cause of failure and the greatest source of harm to any organization and its success, is the likelihood of a wrong decision that has major ramifications.

I discussed this in World Class Risk Management and extended the discussion in Making Business Sense of Technology Risk, where I made a distinction between strategic decisions (which include setting objectives and strategies) and tactical decisions.

Decisions

We should be concerned if the likelihood of poor decisions, especially but not limited to important ones, is higher than we can tolerate.

 

What are the root causes of poor decisions?

There are many, including:

  • Poor framing of the decision
  • The wrong people making the decision
  • Relying on information that is not complete, accurate, or up-to-date
  • Not seeking all relevant information
  • Cognitive and other bias
  • Not including others that either have relevant information or who might be affected by the decision
  • Not…

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