Risk managers can help executives make incisive decisions by running a decision analysis on major projects, but first they must convince executives of the approach

A structured approach to decision-making will add significant value and prevent costly errors in business but many organisations are ignoring the benefits, says Brian Putt, decision quality consultant at Putt DQ Consulting.

Speaking during the Risk Awareness Week 2019, Putt says: “Decision analysis is a systematic approach to decision making using proven technologies. It has been around since 1980s, but unfortunately does not have as much inroads into companies as it probably should have.”

Its benefits are often ignored or ill-understood by executive management because decision analysis may be used at the wrong point in the decision-making process.

People tend to use decision analysis after a decision has been made to prove that it is right rather than to use it to inform the process, says Putt.

“This is a mistake,” he says Putt, “because once you’ve made a decision you have closed off some of the alternatives and significantly narrowed the range of outcomes.”

Applying decision analysis on a complex and strategic decision can be a lengthy process, which executives may often view as time-consuming, questioning its value.

“We had to get over this [misconception] at Chevron,” says Putt. “the first decision analyses we did were big projects and they took lots of time, so people asked, ‘are we really getting value?’”

“We needed to educate the decision review board meetings. Then as people became more educated, they became more efficient, because they understood what decision analysis was about.”

“And it’s scalable,” he adds. “You’ve got this great big tool box and you can spend three months trying to decide something or it could be two or three people in an office with a whiteboard and you spend an hour writing out the frame of it and you may find from just the frame and the strategy table that there’s an obvious solution.”

As such, when introducing new decision analysis frameworks to a company, Putt says it’s important to consider the project to which the framework is applied.

He advises that in the pilot stage, risk managers should select one to three projects to give an indication of the meaningful analysis that it could elicit, demonstrating, for example, where uncertainty is particularly high.

“There’s often one event that changes the mindset of people, which is when you can conduct a decision analysis on a project that is uncertain, where the decision maker doesn’t know what to do and you come back and there is now clarity in the decision and he says, ‘ok this is really a good process’.”

 To view Putt’s full workshop, please click here: https://2019.riskawarenessweek.com/talks/importance-of-framing-the-decision/