Category: Competency

Expert Intuition and Risk Management

Saturday Morning Breakfast Cereal source http://smbc-comics.com/comic/horrible

Risk management is a crucial aspect of any organization or project. However, it is often subject to human errors in subjective risk judgments. This is because most risk assessment methods rely on subjective inputs from experts. Without certain precautions, experts can make consistent errors in judgment about uncertainty and risk.

There are methods that can correct the systemic errors that people make, but very few organizations implement them. As a result, there is often an almost universal understatement of risk. We need to keep in mind a few rules about experience and expertise.

  • Experience is a nonrandom, nonscientific sample of events throughout our lifetime.
  • Experience is memory-based and we are very selective regarding what we choose to remember,
  • What we conclude from our experience can be full of logical errors
  • Unless we get reliable feedback on past decisions, there is no reason to believe our experience will tell us much.

No matter how much experience we accumulate, we seem to be very inconsistent in its application.

Experts have unconscious heuristics and biases that impact their judgment, some important ones include:

  • Misconceptions of chance: If you flip a coin six times, which result is more likely (H= heads, T= tails): HHHTTT or HTHTTH? They are both equal, but many people assume that because the first series looks “less random” than the second, it must be less likely. This is an example of representativeness bias. We appear to judge odds based on what we assume to be representative scenarios. Human beings easily confuse patterns and randomness.
  • The conjunction fallacy: We often see specific events as more likely than broader categories of events.
  • Irrational belief in small samples
  • Disregarding variance in small samples. Small samples have more random variance that large samples is considered less than it should be.
  • Insensitivity to prior probabilities: People tend to ignore the past and focus on new information when making subjective estimates.

This is all about overconfidence as an expert, which will consistently underestimate risks.

What are some ways to overcome this? I recommend the following be built into your risk management system.

  • Pretend you are in the future looking back at failure. Start with the assumption that a major disaster did happen and describe how it happened.
  • Look to risks from others. Gather a list of related failures, for example, regulatory agency observations, and think of risks in relation to those.
  • Include Everyone. Your organization has numerous experts on all sorts of specific risks. Make the effort to survey representatives of just about every job level.
  • Do peer reviews. Check assumptions by showing them to peers who are not immersed in the assessment.
  • Implement metrics for performance. The Brier score is a way to evaluate the result of predictions both by how often the team was right and by the probability the estimated for getting a correct answer.

Further Reading

Here are some sources that discuss the topic of human errors and subjective judgments in risk management:

Competence

We can break down people’s abilities into four areas:

CapabilityWhat people need to do to produce results
SkillBroken into technical knowledge and practiced performance
InterestPassion
Required behaviorsOperationalize the organization’s vision, culture, or way of being in behavioral terms. 

Competence is a combination of Capability and Skill. If I do not have the capability for the work, no amount of developmental training will be helpful. And, I don’t have the skill, you will never see my capability. Competence is a combination of both.

Interest or passion for the work will influence the amount of time for practice. The more interested I am, the more time I will spend in practice. And if I don’t practice a skill, the skill goes away, and competence diminishes.

There is also a set of required behaviors. Practice arrives with many qualities, frequency of practice, duration of practice, depth of practice, and accuracy of practice. Accuracy of practice relates to required behaviors. Practice doesn’t make perfect, only perfect practice makes perfect.

Deliberate practice allows us to influence all four attributes.

Experts think differently

Research on expertise has identified the following differences between expert performers and beginners

  • Experts have larger and more integrative knowledge units, and their represen­tations of information are more functional and abstract than those of novices, whose knowledge base is more fragmentary. For example, a beginning piano player reads sheet music note by note, whereas a concert pianist is able to see the whole row or even several rows of music notation at the same time.
  • When solving problems, experts may spend more time on the initial prob­lem evaluation and planning than novices. This enables them to form a holistic and in-depth understanding of the task and usually to reach a solution more swiftly than beginners.
  • Basic functions related to tasks or the job are automated in experts, whereas beginners need to pay attention to these functions. For instance, in a driving Basic functions related to tasks or the job are automated in experts, whereas beginners need to pay attention to these functions. For instance, in a driving school, a young driver focuses his or her attention on controlling devices and pedals, while an experienced driver performs basic strokes automatically. For this reason, an expert driver can observe and anticipate traffic situations better than a beginning driver.
  • Experts outperform novices in their metacognitive and reflective thinking. In other words, they make sharp observations of their own ways of think­ing, acting, and working, especially in non-routine situations when auto­ mated activities are challenged. Beginners’ knowledge is mainly explicit and they are dependent on learned rules. In addition to explicit knowledge, experts have tacit or implicit knowledge that accumulates with experience. This kind of knowledge makes it possible to make fast decisions on the basis of what is often called intuition.
  • In situations where something has gone wrong or when experts face totally new problems but are not required to make fast decisions, they critically reflect on their actions. Unlike beginners, experienced professionals focus their thinking not only on details but rather on the totality consisting of the details.
  • Experts’ thinking is more holistic than the thinking of novices. It seems that the quality of thinking is associated with the quality and amount of knowledge. With a fragmentary knowledge base, a novice in any field may remain on lower levels of thinking: things are seen as black and white, without any nuances. In contrast, more experienced colleagues with a more organized and holistic know­ledge base can access more material for their thinking, and, thus, may begin to explore different perspectives on matters and develop more relativistic views concerning certain problems. At the highest levels of thinking, an individual is able to reconcile different perspectives, either by forming a synthesis or by inte­grating different approaches or views.
LevelPerformance
BeginnerFollows simple directions
NovicePerforms using memory of facts and simple rules
CompetentMakes simple judgmentsfor typical tasksMay need help withcomplex or unusual tasksMay lack speed andflexibility
ProficientPerformance guided by deeper experience Able to figure out the most critical aspects of a situation Sees nuances missed by less-skilled performers Flexible performance
ExpertPerformance guided by extensive practice and easily retrievable knowledge and skillsNotices nuances, connections, and patterns Intuitive understanding based on extensive practice Able to solve difficult problems, learn quickly, and find needed resources
Levels of Performance

Sources

  • Clark, R. 2003. Building Expertise: Cognitive Methods for Training and Performance Improvement, 2nd ed. Silver Spring, MD: International Society for Performance Improvement.
  • Ericsson, K.A. 2016. Peak: Secrets From the New Science of Expertise. Boston: Houghton Mifflin Harcourt
  • Kallio, E, ed. Development of Adult Thinking : Interdisciplinary Perspectives on Cognitive Development and Adult Learning. Taylor & Francis Group, 2020.

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Know the Knows

When developing training programs and cultural initiative sit is useful to break down what we really want people to know. I find it useful to think in terms of the following:

  • know-how: The technical skills to do the work
  • know-what: The ability to perform functional problem-solving, to adapt the process and innovate
  • know-who: networking and interpersonal skills, with social/emotional intelligence, for empathy or social network capacities
  • know-where: institutional and system knowledge of how the work fits into a larger ecosystem
  • know-who/how: strategic and leadership skills, for political ‘ nous’ in setting agendas, managing institutions, mobilizing resources;
  • know-why: creation of meaning, significance, identity, morality, with practical intuition for creative arts, sports, everyday social exchange.

To build all six elements requires a learning culture and a recognition that knowledge and awareness do not start and end at initial training on a process. We need to build the mechanisms to:

  • Communicate in a way to continually facilitate the assimilation of knowledge
  • Incorporate ongoing uses of tools such as coaching and mentoring in our processes and systems
  • Motivate the ongoing enhancement of learning
  • Nurture the development and retention of knowledge

We are striving at building competence, to be able to grow and apply the knowledge and abilities of our workers to solve problems and innovate.

Training, Development, Knowledge Management, Problem-Solving – these are a continuum but too often we balkanize responsibility of these in our organizations when what we need is an ecosystem approach.