Human Factors in Risk Assessment

Human Factors in Risk Assessment

Risk assessment methodologies are based on objective and intuitive risk factors, such as probability and impact. Others methodologies adopt more sophisticated risk factors such as urgency or data quality. Regardless of the efforts of professionals and organization to adopt objective criteria, risk assessment remains largely subjective and emotive.

This article discusses human-related factors or traps that can influence risk assessment.

Motivational bias

Motivational bias represents a conscious or unconscious distortion on perception motivated by personal interest. Examples of risk assessment motivational bias are:

  • Conscious that bad news don’t sell, management minimizing risks because of a personal interest in launching the project;
  • Subject matter experts may over assess the importance of specific risks to increase their importance;
  • People may prefer to underestimate the risk instead of responding to it;
  • An organization that launched a project might fail to recognize that risks were strongly underestimated to avoid acknowledging that the project is no longer feasible and should be therefore terminated.

Cognitive bias

Cognitive Bias is a unconscious distortion on perception and decisions. People make decisions quickly, based on limited information. This ability allows us to function effectively, instead of waiting until all the information is  vailable and is duly processed. But our ability to perceive reality with limited information leads to perception mistakes. Cognitive bias may result from several reasons:

  • Recollection – People will more strongly react to recent experiences. A risk that occurs on a recent project will appear as more likely and severe than a similar risk that is not easily recalled.
  • Overconfidence – Another basic human need is feeling safe and under control. While facing uncertainty, people tend to underestimate unfamiliar sources of uncertainty or risks where they have no control over. While facing an  unfamiliar risk, people might feel tempted to minimize it to help build a sense of confidence. Another example of the overconfidence effect is the natural tend to establish narrower confidence levels around estimates than actual reality.
  • Anchoring – Anchoring is a basic human tendency to avoid changing our opinion. Questioning ourselves can be uncomfortable and troublesome. Risk factors, such as probability and impact, are typically assessed in the beginning of the project with limited information about those risks. As the project progresses, there will be improved information about the risks. Still, human nature might be anchored to the initial risk baseline perception.
  • Confirmation – Confirmation bias reflects human tendency to seek data that confirms our perceptions and neglect information that contradict it.

 

 


Henrique Moura, PMP, RMP, ACP, EVP, ITIL PRINCE2

Invited Professor in the Master in Project Management Program

at the University for International Cooperation.

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