Known risk vs uncertainty

ZHANG © 2015

The contributor made efforts to distinguish known risk and uncertainty and highlighted that two decision-making methodologies ought to be undertook.

1 When known risk is dealt, good decisions require logic and statistical thinking.
Risk needs to be communicated properly. To achieve it, (1) what might happen (crisis and risk), (2) what has been done and being done (by the authority), (3) what to do to avoid it happening if necessary, are key information to be conveyed. Overall, being transparent is important. And publicity needs to be educated to understand risk.
2 When faking uncertainly, nevertheless, intuitions are relied on and rules of thumb are suggested.
Intuition refers to unconscious competency. It can be regarded as the most sophisticated capability because of its spontaneity which all the development programs expect to achieve but hard to.
Some of suggestions are sound and helpful for us who are asked to do something even though everything is uncertain, especially in business context.
(1) Positive error culture.
People make defensive decisions, for example to recognition heuristic, to avoid taking responsibility if the decisions go wrong. A positive error culture can encourage take chances to try and be not afraid of shame of mistakes as uncertainty is unpredictable anyway and we need to learn from the mistakes, which matters most.
(2) Less is more.
Importation is always limited for a best decision. If so, why don’t we stop exploring unlimited information but rely on best-known knowledge, simply the situation, and make a rather rational solution. There are many effective examples of simple solution of complex, i.e., invest equally, 37% rule, one-good-reason.
(3) Trust
Trust ourselves and take the ownership of the decisions.
Also, trust others’ competency and motivation.
Gather merits and make better decisions jointly.