Posted by: terryhowe | February 26, 2010

Human Factors of Risk: Part 1

I’ve been rereading Backcountry Skiing: Skills for Ski Touring and Ski Mountaineering by Volken, Schell, and Wheeler and the human factors of decision making always interest me.  The same factors apply to business without such dire consequences.

  • Age and Gender: Younger males below the age of 27 are more willing to accept risk than older people and females.
  • Dependents: People who have dependents, especially young children, tend to be less willing to accept risk than those without.
  • Proficiency and Conditioning: Highly skilled and fit people are more willing to take risks than less fit novices.
  • Blue Sky Syndrome: People are more aggressive when the sun is shining.
  • Fun Factor: People are less apt to be cautious when there is a high fun factor.
  • Goal Seeking: People ignore risks for “important” objectives.
  • Logic vs. Emotion: When a people are near a goal, good time or validation, they are likely to ignore risks.
  • “Real” Risks:  People can either be fearful or over confident because they are focused on one risk causing them to ignore another risk.
  • Back to the Barn Syndrome: Bad decisions get made late in the day when you are tired.
  • Negative Event Feedback Loop: People that expose themselves to risk and get away with it can become desensitized.

In real business, some of these considerations are not very important such as age and dependencies, but some of the others apply.  I’ve seen where the fun factor can come into play in business.  I was working on a project once where the decision was being made whether to use Java or C++ for a high volume real time application.  This was many years ago when it was a little harder to just throw hardware at the problem.  Java was selected because it was more fun and the project failed.

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