by Michael Arbow, MBA
Partner, RSD Solutions Inc.
My colleague, Rick Nason has recently done a series of blogs on “Models “and on occasion peers into the world of algorithm based risk management. While these risk management techniques (processes?) have their place there is, as a supporter of behavioral economics, a greater force at work determining your approach to risk management and in turn, the way you handle and quantify risk. This greater force is looked at by Ms. Heidi Grant Halvorson, a motivational psychologist who believes that it is how we think about the goals we pursue that determines our views and management of risk.
When we pursue a goal we make many decisions along the way and according to Ms. Halvorson we make our decisions based on either what we might lose or what we might gain. In other words we may have a prevention focus or a promotion focus. Sadly, it is pointed out that the prevention focus, while helping your organization (or you personally) in the short term, in the longer term it will be those following a promotion focus that will come out on top. For the “promotion motivation is about getting ahead, maximizing your potential, and reaping the rewards” and “never missing an opportunity for a win, even when doing so means taking a leap of faith”.
With this in mind, what is your “focus”? How do you feel it impacts your risk management strategy and just as importantly, the road to achieving your goals?
For more on Heidi Grant Halvorson’s thoughts click on the link: http://tinyurl.com/3ne63df
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