Our Perception vs Reality: Building Robust Decision and Risk Management in Five Key Steps

By Chris Bird, Riskwell Chairman

Our visions of the future often clash with its reality. What we expect is not always what unfolds, as our perceptions are heavily coloured by experience, assumptions, biases, and mindset.?

Take, for instance, the image above. At first glance, many will see a man kneeling with a book in his hand, perhaps in a moment of prayer or contemplation. Yet, on closer inspection, it is simply a collection of rocks in a stream, photographed from a particular angle to create an illusion.?

In much the same way, we, as humans, tend to create "pictures" of the future based on immediate and certain outcomes. This is a process riddled with blind spots and assumptions, which can lead us to misjudge the real risks and complexities ahead. It is therefore no surprise that research indicates 50% of all decisions made are incorrect, impacting future performance.?

With global uncertainties and risks rising, taking a single, narrow perspective is a mistake. We must approach situations from multiple angles, question assumptions, explore alternatives, and develop a system-level view to chart the best course for sustainable success.?

Unfortunately, many organisations still do not approach decision-making, risk management, and the link between them both with the gravity these warrant—especially now when unpredictable shifts and high volatility define the business landscape. This reluctance to look beyond conventional approaches often prevents businesses from seeing beyond the “illusion” of current realities to understand what genuinely lies ahead.?

At Riskwell, we have seen that simply employing a risk manager or running risk identification workshops is not enough. Placing risk data in spreadsheets without integration into broader decision-making often impedes, rather than improves, performance. Conversely, organisations that effectively embed decision and risk management frequently perform within the top 20%, consistently excelling over the long term.?

Here, Riskwell recommends a structured five-step approach to integrate decision and risk management practices, fostering resilience and a competitive edge.?

Step 1: Meaningful Conversations

For any project to succeed, it must start with the right framing. This involves a clear understanding of the organisation's vision, challenges, capabilities, leadership commitment and how decision and risk management can specifically serve its unique goals. The right conversation aligns teams and sharpens focus, laying the groundwork for effective, strategic actions.?

Step 2: Benchmarking for Success

Implementing a new process is futile if an organisation is not equipped to capitalise on it. The ISO 31000 standard, a global benchmark for risk management, is used by 57 national governments and can guide organisations toward effective risk practices. By assessing an organisation’s maturity in terms of people, processes, and systems, leaders can pinpoint gaps and devise an improvement plan. Often, these adjustments are simpler than anticipated yet yield powerful results.?

Step 3: Training and Development

There is often a wide gap between what people think decision and risk management entails and its true essence. Like the image at the top, the concept can be misleading. Effective decision and risk management (DRM) revolves around informed choices; if even 80% of decisions are sound, the business gains a significant competitive advantage. Clear criteria, a comprehensive understanding of risks and a unified framework for analysing the future are essential.?

Embedding DRM into an organisation begins with proper training, be it online, remote, or face-to-face. With the right education, DRM becomes an in-house strength, not a task relegated to external consultants. This foundational knowledge is strategic to success and should be treated as valuable intellectual property within the business.?

Step 4: Embedding Systems and Processes

To progress in DRM, it is essential to build on existing capabilities incrementally. A novice cannot leap from a basic skill level to mastery in a single step, and neither can an organisation advance from the lowest maturity level to the highest overnight. Implementing processes in phases, starting from the current capability and steadily improving, helps to create a system of continuous enhancement. This gradual embedding often leads to organisations not only ranking in the top quartile but being recognised as best-in-class.?

Step 5: Assurance and Verification

No one person has a complete view of what the future holds in a year, let alone five or ten. To guard against blind spots, organisations need internal and external assessments. By examining assumptions, alternatives, and outcomes considering business criteria and risks, they can refine their approach.?

This assurance and verification stage involves three critical activities:

• Assessing decision-making culture and identifying strategic biases.
• Checking risk assessment outcomes against global risk trends and key thematic clusters.
• Testing criteria, scenarios, and alternatives to ensure robust strategic action.?

This phase ensures that organisations have built strong capabilities and gathered reliable knowledge, making better decisions that lead to better outcomes.?

In Summary: Thrive in a VUCA World

In a world characterised by volatility, uncertainty, complexity, and ambiguity (VUCA), decisions have become harder and more urgent. This may explain why we are seeing an increase in failing projects and business ventures. Yet, robust decision and risk management have repeatedly shown to improve teamwork, communication, leadership confidence, and the quality of strategic decisions.?

Despite its critical impact, many boards remain reluctant to invest in DRM due to past implementations that failed to deliver tangible value. Statistically, only 1 in 15,000 companies achieve a $30 million valuation, and 1 in 7 goes into liquidation each year. However, companies with good DRM practices in place typically perform in the top 20%, having mastered the art of informed decision-making.?

For organisations aiming to build long-term resilience and sustainable success, Riskwell offers the expertise to help embed these essential practices. For an informal discussion, reach out to us at Riskwell.

Follow Chris Bird, Riskwell Chairman.

Follow Riskwell for more news and articles.