essential decision making steps
Classify visible phenomena by severity using decision attributes.
Know the risk taken applying a risk based approach.
Generate decision options considering data, risk and expected results.
Opt for the best option considering previous experience and risk policy.
|Preserve the organization’s corporate memory and demonstrate knowledge during decision making.|
In decision making, organizations often act without classifying the visible phenomena, without considering the case severity that will condition the seniority of the persons involved or the fact that all decisions require a risk based approach with a solid knowledge of the risk exposure.
Corporate memory or institutional knowledge is an essential but abstract concept. Most organisations focus operationally on information and data without considering the importance of the corporate memory for the functioning of the entity including cultural knowledge relating to their processes, risk management and decisions. Information technology stores data and information, however they do not store underlying justification for decisions and mistakes. These are rarely documented, used for predicting new decisions or passed down through people and teams.
Severity or decision prediction, at the beginning of the decision process, will provide a qualitative and quantitative advantage. In fact, AI and machine learning technology will compare new cases with previously taken decisions (corporate memory) and provide a prediction in order to allow the allocation of appropriate resources and an evaluation of the case severity. For many organizations, this feature, will save wasted millions and increase pro-activity.
Years of efforts in information technology helped organizations to reach an unprecedented level of excellency. Although there is still room for improvement, data management in organizations is now reliable and applications fulfill their promises.
In the Contoso example, a list of suspicious transactions raised by the transaction monitoring system is sent daily to the Compliance desk. The investigation team, composed by officers of different levels, need to eliminate the irrelevant cases and evaluate severity in order to redirect each relevant case to the appropriate seniority level. Every case is classified using decision attributes rated from 0 to 4 showing the risk level. Both, the risk rating and the weight of each decision attribute (criteria) will contribute to the calculation of the global weighted risk an important risk exposure indicator. Although for many decision attributes the initial value may be expressed in dollars, points, or whatever scoring system makes sense, it is converted to a risk scale as this is defined by the organization’s risk policy.
|Decision Attribute||Initial Value||Risk Rate|
In the chart below we can see how decisions are affected by the decision attributes. The legend of the chart shows the decision attributes and the vertical left scale the risk values.