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Unconscious biases: are they undermining your decision making?

Airmic member Karla Gahan offers practical steps to help risk managers re-wire harmful biases embedded in their organisation

It is estimated that up to 90% of our thought processes happen automatically as subconscious reactions. This is believed to be an evolutionary tactic which helped humans make quick judgements to survive.

In business as well as our personal lives, we automatically use these shortcuts to make decisions: whether to accept risks, to determine new recruits, include people as part of a team, allocate work to them, promote them, or value their opinion and decision-making skills. The list could go on.

While these shortcuts might be integral to human behaviour, they have a downside. We may consider ourselves to be good decision makers or judges of character, but by relying so heavily on these stereotypes and shortcuts, we are tapping into our biases, and we risk making poor choices. It is therefore vital that businesses recognise and address the impact they might be having.

Nudging behaviour

Trying to influence our unconscious bias is, however, extremely challenging for the obvious reason that we are unaware we are doing it. Research has shown that raising awareness and training does little to change individual behaviour. Crucially, however, research also shows that training can be effective in helping us identify bias in others. What's more, once biases are identified and recognised as counter-productive, it is possible to implement measures to mitigate biased behaviour.

One such approach is called, to use the language of behavioural economists, a "behavioural nudge". This is a means of impacting behaviour by framing choices in a particular way without forbidding any options or significantly changing their economic incentives.

This technique is widely recognised and used in many different areas of influence including policy making and, unsurprisingly, marketing. The UK government even created a "Nudge Unit" which helped to create changes to improve processes for several government departments.

For example, to improve collection of tax revenue, the Nudge Unit worked with HMRC to change the language on letters reminding people to pay their taxes. The subtle change, or nudge, was to amend the language from "you must pay or else" to, "most people pay their tax on time". By tapping into an unconscious bias and using a nudge - in this case the desire to conform to the behaviour of others of a similar status - they were able to influence the behaviour of thousands of people and increase revenue collection by tens of millions of pounds.

Implications for risk managers

Risk managers have a unique and privileged position in terms of being able to recognise and assist in countering bias, either explicit or implicit. When assessing and discussing risks we are given direct access to all areas of the business and have the opportunity to observe behaviours first hand. When we notice biases as part of our role, we can help to implement measures or nudges that help to change behaviours and improve culture.

There are many practical techniques that can help the risk manager. Some of them are highlighted below:

  • Include alternative views

Most of us gravitate to people who are similar to us in background. This plays directly into confirmation bias as we seek to find opinions which reinforce what we believe to be true. This is particularly a risk at the board level, where groupthink can lead to "board blindness" which undermines the resilience of the whole organisation.

To create an inclusive and non-biased culture, ensure the right people are involved in teams, meetings and projects. Rather than invite attendees to a meeting based on rank or because you know their views will give you the answers you need, carefully consider who needs to be there to provide the right balance of opinions, expertise and challenge.

Include people who will bring alternative and innovative views and in the context of risk assessments, seek views from across the organisation before discussing with the executive level so that you can challenge and stimulate an informed conversation.

  • Use scenario planning

Scenario planning can help identify biases in those managing a crisis, so they can be reviewed and addressed in a non-crisis environment.

For example, if a crisis manager will only delegate tasks to a single member of the team, this can be objectively identified as part of an exercise and mitigation strategies put into place. The crisis manager may do this because they know and trust an individual, or they are alike in some way; however, this can cause bottlenecks in a crisis and this behaviour should be avoided.

  • Structure meetings differently

In meetings which encompass a wide range of participants, it can be helpful to ask the least senior person in the room to speak first. When the most senior person in the room makes the opening comments, others may be inclined to agree. When this happens, ideas and innovations may be missed.

Similarly, prior to making a significant decision, it can be helpful to ask participants ahead of the session to write down their views to avoid groupthink. It can also be useful to bring in an independent party to play the role of devil's advocate.

When presenting to senior management with limited time, engage the group by turning a business case on its head and focussing on what the business may lose rather than gain if the proposal is not accepted. This helps capture their attention as it taps into the loss aversion bias and can create a need to feel involved in the subject.

Karla Gahan is deputy global head of risk and advisory at VinciWorks. This article is an extract from her dissertation submitted as part of the Cass Leadership Programme offered to Airmic members. Ms Gahan will be presenting on this subject at the fastTrack Forum on 2 April, register for the forum here.