Summary of content

Risk and decision making are inter-related factors and their study in the context of decision making provides key insights into managerial behaviour. Some decisions are associated with greater risk than others and when managers carry out their organisational duties, they will face a range of decisions that can result in positive or negative outcomes.

Given that risk managers have a central role in the design and implementation of the risk management process, it is imperative that they are aware of how uncertainty and risk influence their own decision making. In the absence of such awareness, their decisions have the potential to cascade and result in systemic flaws. For example, risk managers will plan, design and implement the overall risk management process. They will also be required to conduct risk assessments, establish the risk appetite, offer input into risk models, provide training to colleagues and report risk across the organisation. Further, risk managers must also make decisions based on the information they are provided, which may be imperfect for a number of reasons. While big data has been hailed as a panacea to all information-related decision making problems, it does not necessarily lead to optimal decision making. In fact, if not interpreted critically, big data can become another factor contributing to a risk manager making flawed decisions that impacts their organisation and wider society.

Behavioural risk management examines how individuals perceive problems, risks, solutions, and decisions based on their psychological biases. Its objective is to induce decision makers to make the right decisions when managing risks by incorporating understanding, recognition, and behavioural interventions into the practice of risk management.

This module develops students as behavioural risk managers enhancing their understanding of decision making theory, the psychological, informational, social and structural challenges that are associated with unaided managerial decision making and the key decision analysis methods designed to overcome them. In doing so, it weaves behavioural decision research into the field of decision making by examining the influences on managerial judgment in a variety of organisational contexts. It also challenges the understanding that more information is always better and urges careful interpretation of the information by decision makers. Upon completion, students will have gained a comprehensive understanding of behavioural risk, the barriers to effective decision making and the behavioural risk management interventions needed to accomplish it.

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