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2014/2015  KAN-CCMVV3025U  Managerial Decision Making and Risk Management

English Title
Managerial Decision Making and Risk Management

Course information

Language English
Course ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration One Semester
Course period Autumn
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 95
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Laurel Austin - MPP
Contact information: https:/​/​e-campus.dk/​studium/​student-hub/​aabningstider-og-kontaktinformation
Main academic disciplines
  • Business psychology
  • Business Ethics, value based management and CSR
  • Management
Last updated on 30-04-2015
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, including those derived through case analyses, 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 recognise the strengths and limitations in decision making and risk management processes in problems or situations that are presented.
  • Use ideas from the course to develop context appropriate decision and risk management recommendations when presented with possible situations or problems.
Managerial Decision Making and Risk Management:
Exam ECTS 7,5
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 product can be done individually or in groups of up to three students. The oral exam is comprehensive over the course and will be an individual exam which uses the written report as a starting point.
Size of written product Max. 5 pages
Assignment type Synopsis
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
Make-up exam/re-exam
Same examination form as the ordinary exam
Course content and structure

Managers routinely make difficult decisions that affect their organization, internal stakeholders such as employees, and external stakeholders such as investors, regulators, customers, and the local community. The circumstances around these decisions, large and small, can emerge in highly complex ways influenced by numerous internal and external factors. Such decisions necessarily involve potential risks, for example: health and safety, financial, political, operational, reputational risks, etc.  The quality of outcomes to the organization and stakeholders depends on the quality of decision making, risk communication, preventive activities, and risk mitigation efforts.  In this context, the course intends to create a better understanding of human decision-making and related risk management processes in organizations.  An important aspect of the course is to consider cognitive and other factors that impact risk perceptions, decision making and managerial risk management.  The ultimate goal is to provide students with methods to help individuals and organizations reach better decision outcomes.

This course focuses on individual, cognitive, interpersonal, and contextual factors that affect managerial decision-making and risk management. Most sessions will include interactive discussion-based analysis of one or more cases that students have read prior to the session, followed by supportive discussion and lecture.  The course examines normative decision models (meaning models of how decisions ought to be made), descriptive models of how people actually do make decisions, and prescriptive models and methods intended to bridge the gap between how we do and ought to make decisions. Topics covered will include: selective perception and memory, perceptions of health and safety risks, decision analysis, cognitive limitations and biases, risk culture, stakeholder engagement, crisis management, risk perception, risk communication, intuitive vs. statistical reasoning, enterprise risk management, innovation risk, and preventive decision making.  These topics will be explored in a wide variety of organizational settings.

Teaching methods
Class sessions adhere to a case-based teaching approach, with supportive lectures as appropriate. This means that much of the learning will take place through student discussion. 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 expected to read required class materials and to carefully consider case assignment questions before the session. Students may find it beneficial to discuss case assignment questions in small groups before class meetings.
Expected literature

Anticipated literature, to be finalized in the course syllabus:  



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.


Articles and Chapters

Austin, Laurel C., and Baruch Fischhoff. "Consumers’ collision insurance decisions: A mental models approach to theory evaluation." Journal of Risk Research 13.7 (2010): 895-911.


Plous, S. 1993. The Psychology of Judgment and Decision Making, McGrawHill, 1993, Chapters 1-3.

Hastie and Dawes, 2010.  ‘What is decision making?’ in Rational Choice in an Uncertain World, 2nd ed., Chap 2, pp 23-43. Thousand Oaks: Sage.


Gregory, R., et al. "A multi-channel stakeholder consultation process for transmission deregulation." Energy Policy 31.12 (2003): 1291-1299.

Austin, Laurel and Baruch Fischhoff. (2012).  Injury prevention risk communication: A mental models approach. Injury Prevention. 18(2), 124-129.

Lovallo, D. & Kahneman, D. 2003. Delusions of Success: How Optimism Undermines Executives’ Decisions, HBR, 81(7), pp.56-63.

Thaler, R. (1985).  Mental accounting and consumer choice.  Marketing Science, 4, 199-214. 

Fischhoff, B., Nadaï, and I. Fischhoff (2001).  Investing in Frankenfirms. The Journal of Psychology and Financial Markets, 2 (2):100-111

Austin, L., S. Reventlow, P. Sandøe, and J. Brodersen. (2013) The structure of medical decisions: Uncertainty and risk in five choice situations.  Health, Risk and Society 15(1).

Merton, 2013.  Innovation Risk: How to make smarter decisions.  HBR, April, 2013,
Tversky A., and Kahneman, D (1971).  Belief in the Law of Small Numbers.  Psychological Bulletin, 76(2), pp. 105-110.

Morgan et al. 2002. Chapter 3, “Creating an expert model of the risk” in Risk Communication: A Mental Models Approach. 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.
Several Business Cases, which may include
Fall Before Rising: The Story of Jai Jaikumar  by H. Kent Bowen; Richard Squire; Sarah Vickers-Willis; Harry Wilson

Workplace Safety at Alcoa (A) (2000) by Kim B. Clark; Joshua D. Margolis.  (HBS 692-042) 

3M Optical Systems: Managing Corporate Entrepreneurship. Bartlett, C. (HBS 5-398-094). 

iPremier (A): Denial of Service Attack.  Austin, R. and J. Short. (2009).  (Graphic Novel Version, HBS 609-092)
Enterprise Risk Management (ERM) at Hyrdo One. Anette Mikes (HBS 5-110-086).

Total's Carbon Capture and Storage Project at LACQ (A): Risk Opportunity in Public Engagement  by Devin McDaniels; Frances Bowen

How Gap Inc. Engaged With its Stakeholders by N. Craig Smith; Sean Ansett; Lior Erez

SchmidtCo. Hammond, J. 2004. (HBS 9-904-080)
Group Process in the Challenger Launch Decision (A), Edmondson, A. 2002. HBS Case 9-603-068
British Petroleum and John Browne: A culture of risk beyond petroleum. Hunter, T., and M. Bryant. (2008).  (Ivey 908-M02). 
Cancer Cluster at UCSD.  Austin, L.

Last updated on 30-04-2015