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Step 4: Analysing Risk
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The fourth and last step in the decision process is to carefully consider the risk involved with each of the leading alternatives.
This is the most neglected step in decision making because we tend to look at life’s new possibilities and beginnings enthusiastically. But, you must examine the risks in your decisions before you carry them out.
To do this, simply ask, “What can go wrong?” Here again, seek help from others with experience, talk to individuals who are opposed to the decision and talk to people who will be involved in carrying out the decision. Several individuals can often foresee future problems better than one person working alone.
When first considering potential risks, deal with one alternative at a time. That is, do not initially try to evaluate the possibility of each risk occurring in every alternative. Then when you have completed your list of potential risks (problems) for the first alternative, evaluate each potential problem in terms of the probability of it happening and its seriousness if it does happen. You may use the numerical scale 1 to 10 to assign “seriousness” and “probability” weights to each of your risks.
Multiply the two weights; add the number and the results score will show the amount of risk involved in the alternative. Then repeat the process with each of your other leading alternatives.
| Step-by-step Decision-making Process Checklist | ||
| Step 1 | Write an open decision Statement | Starting with “select best way” almost guarantees an open decision statement. |
| Step 2 | List objectives |
Ask questions: What factors should you consider? What are your resources (money/time/people)? What results do you want? What restrictions are needed? |
| Determine “Musts” | ||
| Weigh “Wants” (1 – 10) | ||
| Step 3 | Create alternatives | Brainstorm a list of alternatives on another sheet. (Do not evaluate alternatives until list is completed). |
| Select best 3 or 4 alternatives. | ||
| Write date in “must” objective/alternative boxes first. | ||
| Eliminate any alternative that does not meet any “must”. | ||
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Write in balance of data: Use phone if necessary to obtain factual information. Try to avoid “yes” and “no” data, use facts and figures whenever possible. Do not use “good/better/best” classifications – use information. |
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| Weigh alternatives on a scale of 1 – 10, assigning 10 to the best alternative for each “want” goal. | ||
| Multiply objective weight by alternative weight and record on grid. | ||
| Add scores for each alternative. | ||
| Step 4 | Analyse risk | Select top two alternative scores for risk analysis. |
| Evaluate probability and seriousness of risks for each selected alternative. | ||
| Do not subtract risk scores from alternative scores. | ||
| Do not double-load a decision by rewriting a goal as a risk. | ||