Human risks are the biggest threats to 21st century organisations and the answer to managing it can be found in behavioural science, according to Christian Hunt, founder of Human Risk Limited
“As we look at 21st century risks, particularly in the knowledge service… human risk is becoming more and more critical,” he told attendees during the second day (15 October) of Risk Awareness Week 2019.
“Look at the number of incidences of human error recorded in the press – [human risk] is a pretty big deal,” he warned.
“If we are trying to mitigate the risks that people pose, the science – supported by academia and research into why people do things – is absolutely critical. If we want to mitigate the risks, we need to understand the drivers behind those behaviours.
“By understanding the real drivers of human behaviour, we can influence them to deliver better outcomes,” he said.
Hunt defined human risk as: “the risk of people doing things they shouldn’t, or not doing things they should”, including wilful wrongdoing to accidental mistakes.
“People often think of risk in the context of making mistakes and doing the wrong thing,” he said. But, “not taking decision can have as much impact as actually taking them”.
Hunt cited the work of psychologist, Daniel Kahneman’s theory, which breaks down thinking into two system: system 1 – automatic, frequent, emotional, stereotypic, unconscious, allows us to deliver decisions quickly; and system 2 – slow, effortful, infrequent, logical, calculating, conscious.
He said that most decisions are made using system 1 thinking and that humans tend to rationalise their system 1 decisions with system 2 thinking.
“From a risk perspective, if people have made a decision using system 2 to rationalise [the decision], the risk taking that is inherent in that decision occurs at an earlier instance,” he explained.
“So, if we want to influence that, we need to ask, how can we influence system 1 thinking rather than influence system 2?
“In other words, this means we need to speak to people on a basic primeval level and influence that basic primeval level 1 rather than trying to be too sophisticated and influence people with logic.”
Hunt outlined five rules to managing human risks:
- Human risks can be managed but not eliminated: It is impossible to eliminate everything, Hunt said. So, focus should be placed on eliminating the risks that could result in irrecoverable damage “but accept that there will be a certain amount of human risk [that cannot be eliminated].”
- Compliance is an outcome not a process. Hunt explained that compliance relates to a desired behaviour, principals or ethics that we want people to follow – the outcome (not the process). “When people examine human risk, they look at the process and not the outcome. So, if you want to influence decisions, think about the outcome not the process. Sometimes we might need to change the outcome.”
- Human algorithm is complex and often irrational: “Our brain is running a form of algorithms”, said Hunt. “We are inputting data – observing, hearing, experiencing things –that data gets processed and then there is an output and that output is the decision-making. So, if we want to change the output – the opinions and views – we need to change the input. If you can change the input, the output will change in line with that.”
- To change the behaviour, change the environment: “If we want to change how people think about things, we need to try and change the environment in which that decision is made, and this includes the cognitive environment, for example the language and the message we transmit,” Hunt said.
- Just because you can, doesn’t mean you should: “If you want to manage risk in a creative environment, allow employees to make mistakes and give them the freedom of responsibility”, says Hunt, adding that just because employees have that freedom, they should not abuse it. Likewise, for employers, who are “legally entitled to exercise control”, just because they can, and often issue instructions to control and manage risk, this may not be the most effective method.
To view Hunt’s full workshop, click here: https://2019.riskawarenessweek.com/talks/decision-making-and-biases/