The Fear-Risk Connection to Decision Bias

Fight or flight?  Surely, we have all heard this at some time in our lives.  Psychological reactions to stress, hazards, threats, danger, and the ever-present crises broadcast and amplified through various media channels, induce fear, often followed by panic.  Make no mistake, you can be manipulated by fear which triggers emotions.

We distinguish between fear and general anxiety.  Fear is real danger that activates an emotional response, a key concern. Anxiety may be thought of as a response to something we perceive as threatening but no real immediate threat exists.

Emotions feed into memory.  And, therein lies the problem.  Some have described the individual decision-making process as having two fundamental paths.

The first fundamental path is emotional.  Reaction to fear is a survival process, react quickly without thinking, do something now!

The amygdala has two sections located close to the base of the brain and responds to emotions such as threats, stress, and fear. ⁽¹⁾  Once a threat is identified the amygdala activates and signals the adrenal gland to release epinephrine and cortisol into the bloodstream. ⁽²⁾  Biological response quickly happens.  Heart and respiration rates increase to pump more oxygen to major muscles.  You are poised to fight or flee. ⁽³⁾

In Daniel Goleman’s 1995 book, Emotional Intelligence:  Why it can matter more than IQ, he proposed that when the amygdala is activated, logical thought in the brain’s frontal lobes is overridden and the fight or flight response takes over. ⁽⁴⁾

The second fundamental path is logic.  More reasoned and deliberative thought occurring in the brain’s frontal lobes allows us to take in situational information, retrieve information from memory about similar situations, and make a reasoned judgment about how to respond.  Of course, this takes time.

Fight or flight processing in the amygdala and deliberative processing via the frontal lobes both involve the brain’s hippocampus which has a role in memory and emotional responses.  Strong emotional events may be stored in long-term memory and subject to recall.

Automatic reactive behaviors commanded by the amygdala and deliberative frontal lobe decision processes should work together to provide optimal decisions.  In a perfect situation, balance occurs when memories are recalled if relevant to a decision, e.g., to address an emerging cyber risk to a company.

In an imperfect situation, recalled memories may adversely affect an individual’s thought process.  Decision makers are often faced with complex situations, too much information mixed with noise, and their own biases.

So what does all this have to do with risk and mitigation decisions?  Let’s put aside situations posing an immediate threat to personal safety.  Instead, let’s look at business decisions regarding risk and potential decision errors.  Where retrieved memory information is ill fitted to decision situation for one reason or another, a biased decision may occur thereby increasing risk. ^{(5, 6, 7)}

We consider four outcomes for a business risk decision.

First, one might decide a situation poses a greater risk than it actually does.  We might, for example, overestimate risk consequences or the likelihood of the risk materializing or both.  Such a decision might be colored by previous experiences of decision makers, with fear inadvertently and unconsciously affecting decision outcome.

Second, considering an investment in new technology, we might overestimate the benefits and underestimate the resulting risks.  This might be due to an emotion driven decision, e.g., the technology promises breakthrough performance, we want to be the first to adopt it to respond to increasing competition, and there is not much time to decide.

Third, situations where volatility is high makes it difficult to predict next events.  Decreasing stability leads to uncertainty.  New factors emerge that increase complexity and impede rapid situational awareness and response.  Current solutions may not fit today’s ambiguous environment.  Risks that cannot be determined and understood under these conditions may drive those involved in risk decisions who fear uncertainty into biased, less than optimal decisions. ^{(8, 9)}

Fourth, balancing a decision with an explicit understanding the role of fear, emotion (amygdala), and deliberation and logic (frontal lobes) should lead to an optimal decision.  One that balances benefits with risks or balances likelihood with consequences versus one that is unbalanced and thus entails more risk.

The fight or flight decision to step back on the curb from the cross walk when you see an automobile speeding through a red light is an easy amygdala-driven decision.  It is not the time for deliberation.

Business decisions to develop or acquire new technology, making management team changes and entering new markets, all have risk.  Decisions may involve both emotion and deliberative logic.

Hazards and threats are assessed in terms of likelihood (probability) of occurring and consequences to yield a two-dimension understanding of risk.  Adding a third dimension to traditional two-dimension risk thinking may enable making optimal decisions about whether to avoid, accept, or mitigate a risk.

A decision-bias third-dimension is consideration of the possibility of unbalanced bias towards logic or alternatively and in dynamic tension, pre-existing biases driven by fear and emotion.  This might be visualized as a scale to estimate the presence of bias, whether due to emotion or logic.

Such a scale could be used as a catalyst for inquiry.  Then results from application of the scale used to adjust traditional likelihood and consequence dimension ratings.  It adds an element of assurance to optimize risk decisions.

The decision bias dimension might include considerations like identifying your own biases or resisting external pressures such as actions to save money or save face.  Aeronautical decision-making considers factors like time pressure.  A general aviation (private) pilot may be concerned with and feel pressure to arrive at a destination by a certain time.  This may introduce bias into the decision-making process by discounting weather conditions, thus increasing risk and may lead to a fatal result. ⁽¹⁰⁾

When discussing hazards, threats, and risk, try to discern whether logic or emotion is influencing decisions.  One might just ask, is decision-bias a consideration?  It might promote a challenging discussion, revision of risk likelihood and consequences, and a closer to optimal decision.

References:

1. Nancy Moyer, M.D. Amygdala Hijack: When Emotion Takes Over, April 22, 2019. https://www.healthline.com/health/stress/amygdala-hijack
2. What Is Cortisol?  https://www.webmd.com/a-to-z-guides/what-is-cortisol#1
3. David Thomas. Don’t Let Your Hippocampus Stop You From Being A Successful Investor. https://www.forbes.com/sites/greatspeculations/2018/05/10/dont-let-your-hippocampus-stop-you-from-being-a-successful-investor/?sh=799bfc512694
4. Daniel Goleman. Emotional Intelligence: Why it can matter more than IQ.  Penguin Random House, 1995 (later publication dates available).
5. Joseph M. Pierre, M.D. How Does Fear Influence Risk Assessment and Decision-Making?  Overestimating threats and the effectiveness of interventions.  https://www.psychologytoday.com/intl/blog/psych-unseen/202007/how-does-fear-influence-risk-assessment-and-decision-making
6. Buster Benson. Cognitive bias cheat sheet, simplified. Jan 8, 2017. https://medium.com/thinking-is-hard/4-conundrums-of-intelligence-2ab78d90740f
7. Daniel Kahneman. Thinking, Fast and Slow. Macmillan. 2011.
8. Volatility, Uncertainty, Complexity, and Ambiguity, often referred to by the acronym VUCA, dates from circa 1987 use by the U.S. Army War College, has been written about in one form or another by a variety of authors since then, and addressed in a Forbes magazine article in 2017.   https://en.wikipedia.org/wiki/Volatility,_uncertainty,_complexity_and_ambiguity
9. George. VUCA 2.0: A Strategy for Steady Leadership in an Unsteady World, Forbes Magazine, published 17 February 2017
10. Pilot’s Handbook of Aeronautical Knowledge, Chapter 2, Aeronautical Decision-Making, FAA-H-8083-25B, https://www.faa.gov/regulations_policies/handbooks_manuals/aviation/phak/