Resolving Uncertainty in Decision Making

What happens when the assumptions behind an important decision change?

In this RiskMasters — The Download, Grant Purdy explores why decision-making is fundamentally about resolving uncertainty and why organisations need to understand the assumptions on which their decisions depend.

Drawing on the work he developed with the late Roger Estall, Grant explains how good decisions begin with clarity about organisational purpose, the opportunity being considered and the outcomes being sought.

But a particularly important part of the discussion concerns assumptions.

Every decision rests on assumptions about the organisation and the world around it. Yet Grant observes that boards and executive teams rarely record those assumptions explicitly.

That creates a practical governance problem. If the assumptions behind a decision are not visible, how can leaders recognise when circumstances have changed enough to reconsider it?

The objective is not perfect certainty. Grant argues that decision-makers instead need to reach “sufficient certainty” to exercise judgement and act.

In this extract:

• Why decision-making involves resolving uncertainty
• The importance of purpose and desired outcomes
• Why every important decision rests on assumptions
• What Grant means by “sufficient certainty”
• Why boards should make assumptions explicit
• How changing assumptions can signal that a decision needs to be revisited

This extract comes from my CPD-accredited RiskMasters conversation with Grant Purdy on ISO 31000, risk management, uncertainty and better decision-making.

🎧 Listen to the full episode of RiskMasters for the complete conversation.