| A few days ago, I spoke extensively with my friend Prof. Fayadh Alenezi PhD about risk management. One of the topics that was mentioned was the importance of system 2 thinking in relation to risk management. This led me to the question “Shaping system 1 thinking – What is important?“ | In this contribution I give my own opinion, not that of any organization. |
Author: Manu Steens
Contents
What are system-1 thinking and system-2 thinking
The concepts of ‘system-1 thinking’ and ‘system-2 thinking’ have become world famous through Daniel Kahneman’s book ‘Thinking fast and slow’. Yet the importance of this psychological discovery does not sufficiently sink in.
I assume the following descriptions for these concepts:
System-1 thinking is the ‘fast thinking’ that is often prompted in very stressful situations, using the reptile brain. In less stressful situations, it is often about ‘intuitive thinking’, which is often accompanied by BIAS.
This thinking worked very well in prehistoric times, where survival often depended on having quick reflexes. It can be suitable for tackling simple issues.
System-2 thinking is the ‘slow thinking’ that is inherent to reason. It makes use of slower reasoned thinking and is less suitable for situations in which action must be taken quickly.
This thinking works well for many of the more complex issues that people face. It makes more frequent use of scientific methods.
Both ways of thinking can be practiced to improve. And therein lies part of the solution to the problem.
Shaping system-1 thinking – What is important in ‘peacetime’
Pattern recognition
The system-1 thinking for crisis management team (CMT) must be shaped because otherwise mistakes will arise too easily in decisions. This is done most easily by creating pattern recognition that teaches people to be flexible about how to deal with them. And that can be done in at least the following four ways (perhaps this is a non-exhaustive list).
- By means of crisis exercises with the CMT in which a number of unforeseen circumstances are simulated. The more vividly this is presented, the better the scenario and the approach to the problem will stay with you, and a pattern can nestle. A condition is that the lessons identified are reported sufficiently quickly and that they are converted into lessons learned.
- By discussing contingency plans of risk management for specific situations, such as those described in the national risk assessment of the country of the organization, with the CMT and the other crisis teams, not only the contingency plans are fine-tuned but also the threat to the contingency plan and its approach are given the opportunity to establish itself as a pattern.
- By giving presentations in small groups on real cases, the Business Continuity Manager (BC Manager) and the risk manager can cite interesting cases, with the corresponding best practices as mentioned in much literature.
- By not working with one ‘worst case scenario’ but with several ‘reasonable worst case scenarios’ in the Business Continuity Plan (BCP) file with recovery plans and emergency plans, the BC Manager can contribute to pattern recognition.
In each of these proposed methods to realize pattern recognition, it is imperative that top management and the members of the crisis teams are really interested in the cases presented. It is imperative that they make the cases their own by studying them carefully. Otherwise it won’t work. ‘There is no such thing as a free lunch‘. (Robert A. Heinlein)
Why choose pattern recognition?
Pattern recognition is a psychological phenomenon in which the affected person learns to deal with stress and quasi-automatically performs the correct solution that he has previously learned. This is why a trained judoka has more chances in a street fight than an untrained victim. He has learned techniques, and if he practiced them thoroughly, they became reflexes that he performs correctly in the appropriate situation in which he finds himself.
The same happens to an emergency doctor who has been called out many times, or has already treated many cases. He ‘realizes’ the solution when he is confronted with an urgent case.
Similarly, a trained crisis manager will need less time to think if he has thoroughly practiced a large number of patterns. (In this case, one crisis exercise per year is virtually no crisis exercise.) Pattern recognition is therefore important in crisis management.
But there is also a danger in this, namely too much reliance on the patterns and insufficient search for the differences with the learned cases. To this end, it remains important to keep Napoleon’s statement in mind: ‘no plan survives first contact with the enemy’. In my opinion, patterns are good for what are the ‘simple crises’ in cynefin. But pattern recognition becomes less suitable as soon as the crisis exercises and crises become more complex or even chaotic. Nevertheless, even then the crisis managers have to make decisions. And then other aids become necessary. And here too, the Chief Risk Officer (CRO) and his team must step in and provide support. At that point, one has to think together: the members of the CMT, the CRO and the people who are trained in intelligence analysis: the ‘analysts’.
It is in this way, among other things, that risk management version 2 can assert itself. In both peacetime and wartime, one of the CRO’s newer responsibilities is to support decisions made by the top with insightful and reasoned advice.
Shaping system-1 thinking – What is important for ‘wartime’
In ‘wartime’, i.e. in a really complex or chaotic crisis, the CMT is heavily mentally burdened. This can cause people to start applying more and more system-1 thinking which increases the risk of errors. Then it is good if you have a number of people as a backup. Most crisis organizations have thought of this. It is also good to decide together with several ‘interparis’ crisis managers about a situation under the leadership of the ‘primus interparis’ or by majority vote. In the latter case, it is best to have an odd number. But that too may be insufficient and the CMT may need an advisory role. At that point, it is good if the crisis organization has something like crisis analysts who are skilled in various ‘intelligence analysis‘ techniques.
Reasoning about a problem with techniques and rules and who you are as an analyst
Problem
The problem you face during the course of a crisis is the fact that as an intelligence analyst you have to make a constant assessment of the near future.
Where the crisis manager has to fight the crisis of the ‘now’, it is the task of the crisis intelligence analyst to think some time ahead from the known present and the recent past. To do this, he makes use of the problem itself, techniques, rules, and his own ‘character’ or who he is.
Four high-level questions that can be asked in any problem analysis according to Noel Hendrickson in his book ‘Reasoning for intelligence analysts – a multidimensional approach of traits, techniques and targets’ are:
- What is happening?
- Why does it happen?
- When and how can it change?
- How can the customer react to it?
Techniques
A number of techniques are described in the book ‘Structured Analytic Techniques for intelligence analysis’ by ‘Randolph H. Pherson and Richards J. Heuer Jr. and in the book ‘Reasoning for intelligence analysts – a multidimensional approach of traits, techniques and targets’ by Noel Hendrickson. It is useful to use several techniques together, as described in the book ‘Psychology of Intelligence Analysis‘ by Richards J. Heuer Jr.
Some of my favorite techniques are ‘Quadrant Hypothesis Generation’, ‘Analysis of Competing Hypotheses’, ‘Quadrant Crunching’ and ‘Forced Choice Method’.
Rules
A number of rules for intelligence analysts are described by Noel Hendrickson as follows:
- Identify the relevant background events
- Research possible conclusions
- Come up with possible alternatives
- Interpret a broader meaning
Who you are
Here I want to mention the theory described in the book ‘Reasoning for intelligence analysts – a multidimensional approach of traits, techniques and targets’ by Noel Hendrickson.
In it, he describes twelve ‘character traits’ that must be in balance in order to be able to do ‘ideal reasoning’. It suggests that people’s bias may be determined by an imbalance of character on one or more of these twelve traits.
The author divides these properties into four secondary dimensions, each of which is captured by three tertiary subdimensions.
- Intellectual courage
- Humility: balance between trust and uncertainty
- Advisory: balance of neutrality versus interest of the real world
- Curiosity: balance between breadth and depth of thought
- Intellectual self-control
- Sensitivity: insight into similarities versus change
- Efficiency: balance between thoroughness versus timeliness
- Descriptiveness: balance between quality and quantity
- Insight and perspicacity
- Reflexivity: balance between focusing on yourself and the other
- Versatility: balance between preset and spontaneity
- Integration: balance between ‘bottom up’ and ‘top down’
- Intellectual honesty
- Realism: sees threats versus opportunities
- Elegance: balance between specificities and simplicity
- Charity: balance between opposition and refinements
Conclusion
By regularly evaluating himself on these twelve character traits an intelligence analyst can achieve better results. According to other sources the analyst should not do the analysis work alone because he is biased anyway and that by working together, the analysts average each other out. But since practical circumstances often require an analyst to do the work alone the system of these twelve traits and the self-control of them is a useful tool.
An absolute necessity is that the crisis intelligence analyst is sufficiently proficient in the techniques. That makes it a full-fledged assignment, not an assignment ‘that you just do’.