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2013/2014  KAN-CM_E207  Managerial Decision Making and Risk Management

English Title
Managerial Decision Making and Risk Management

Course information
Language English
Exam ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration One Semester
Course period Autumn
Changes in course schedule may occur
Wednesday 13.30-16.05, week 36-41, 43-47
Time Table Please see course schedule at e-Campus
Max. participants 80
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Laurel Austin - MPP
Administration: Karina Ravn Nielsen, 3815 3782, electives.lpf@cbs.dk
Main academic disciplines
  • Business psychology
  • Communication
  • Management
  • Corporate and Business Strategy
  • Economics, macro economics and managerial economics
Last updated on 20-03-2013
Learning objectives
Final grades will be awarded based on achievement of the learning objectives. These learning objectives include:
  • Demonstrate ability to appropriately apply ideas, theories and methods from the course to organizational situations.
  • Be able to explain ideas, theories and methods from the course and why they are or are not appropriate in a given situation.
  • Demonstrate an ability to present written and oral arguments that show why and how you arrive at conclusions and recommendations in a given situation.
  • Be able to recognize flaws in decision making and risk management processes in problems or situations that are presented, and possible consequences of those flaws.
  • Use ideas from the course to develop context appropriate decision and risk management recommendations when presented with possible situations or problems.
Course prerequisites
None. Open to all master's level students.
Examination
Managerial Decision Making and Risk Management:
Examination form Oral exam based on written product

In order to participate in the oral exam, the written product must be handed in before the oral exam; by the set deadline. The grade is based on an overall assessment of the written product and the individual oral performance.
Individual or group exam Individual
Written case analysis can be done individually or in groups of up to three students. The oral exam will be an individual exam based on that written report.
Size of written product Max. 5 pages
There is a 1500 word limit to the written case analysis. Word-count is to be included on the title page. There is a limit of two appendices with supportive tables or illustrations, although appendices are not required.
Assignment type Report
Duration
Written product to be submitted on specified date and time.
20 min. per student, including examiners' discussion of grade, and informing plus explaining the grade
Preparation time No preparation
Grading scale 7-step scale
Examiner(s) Internal examiner and second internal examiner
Exam period December/January and Winter Term
Make-up exam/re-exam
Same examination form as the ordinary exam
The make-up exam will be the same format as the ordinary exam.
Course content and structure
Managers make decisions that affect their own organization and other stakeholders that have relationships with that organization. The circumstances around these decisions, large and small, can emerge in highly complex ways influenced by numerous internal and external factors. When those decisions relate to a situation that involves some kind of risk, the quality of risk management depends on the quality of decisions, risk communication, and preventive measures.  In this context, the course employs a multi-disciplinary approach to create a better understanding of the decision-making and related risk management processes in organizations.  The ultimate goal is to provide students with methods and approaches to reach better decision outcomes for their organizations and other stakeholders.   
 
The course focuses on individual, cognitive, interpersonal, and contextual factors that affect managerial decision-making and risk management.  We will consider theories and methods from cognitive psychology, behavioral decison theory, social psychology, economics, and statistics.  The course examines decisions in organizations from rational analytical, and empirical descriptive perspectives, with the aim of conceiving different normative and prescriptive approaches. Some of the topics covered will include: decision analysis, cognitive constraints and biases, crisis management, risk perception, risk communication, risk management, intuitive statistical reasoning, and preventive decision making.  
Teaching methods
Class sessions adhere to a case-based teaching approach, with supportive lectures as appropriate. To gain the most benefit from the course, students should be prepared to take active part in discussions and contribute with their unique insights to enhance the learning of the entire class. Therefore, students are asked to read required class materials and to consider the assignment questions before the session. Students may find it beneficial to discuss the assignment questions in small groups before class meetings.
Expected literature
Bazerman, M. H. & Moore, D. 2009. Judgment in Managerial Decision Making (Seventh edition). Wiley, Hoboken, New Jersey.

Fischhoff, B., and Kadvany, K. (2011).  Risk: A very short introduction.   Oxford University Press: New York.

Baron, 2008.  “What is thinking.”  Chapter 1 in Thinking and Deciding, Fourth Edition, Cambridge University Press, pp. 5-22.

Plous, S. 1993. The Psychology of Judgment and Decision Making, McGraw
      Hill, 1993, Chapters 1-3.
 
Lovallo, D. & Kahneman, D. 2003. Delusions of Success: How Optimism Undermines Executives’ Decisions, HBR, 81(7), pp.56-63.

Drew, S., Kelley, P. and Kendrick, T.  (2006).  CLASS: Five elements of corporate governance to manage strategic risk.  Business Horizons, 49:127-138.
 
Tversky A., and Kahneman, D (1971).  Belief in the Law of Small Numbers.  Psychological Bulletin, 76(2), pp. 105-110.

Morgan et al. 2002. From Chapter 3, “Creating an expert model of the risk.”  In Risk Communication. Cambridge University Press, pp 34-47 and 58-62.
 
Austin, Laurel and Baruch Fischhoff. (2012).  Injury prevention risk communication: A mental models approach. Injury Prevention. 18(2), 124-129.

Slovic, P. and Peters, E.  (2006).  Risk perception and affect.  Current directions in psychological science, 15 (6): 322-325.
 
Austin, Laurel, Susanne Reventlow, Peter Sandøe, and John Brodersen. (forthcoming) The structure of medical decisions: Uncertainty and risk in five decision situations.  Health, Risk and Society, special issue on Health Care through the Lens of Risk.

Eisenhardt, K. M. 1989. ‘Making Fast Strategic Decisions in High-Velocity Environments’, Academy of Management Journal, 32, pp. 543-576.

Bower, J. L. & Gilbert, C. G. 2007. ‘How Managers’ Everyday Decisions Create or Destroy Your Company’s Strategy’, Harvard Business Review, 85(2), pp. 72-79.

Several Business Cases, including: 
Edmondson, A. 2002. Group Process in the Challenger Launch Decision (A), HBS Case 9-603-068
Edmondson, A. 2003. Process in the Challenger Launch Decision (B), HBS Case 9-603-070.
Workplace Safety at Alcoa (A) (2000).  (HBS 692-042) 
Austin, R. and J. Short. (2009).  iPremier (A): Denial of Service Attack (Graphic Novel Version, HBS 609-092)
Hammond, J. 2004.  SchmidtCo. (HBS 9-904-080)
Hunter, T., and M. Bryant. (2008). British Petroleum and John Browne: A culture of risk beyond petroleum.  (Ivey 908-M02). 
Austin, R., et al. (2003).  Harley Davidson Motor Company: Enterprise Software Selection. (HBS 9-600-006).
Austin, L. (working paper).  Cancer Cluster at UCSD.  
Last updated on 20-03-2013