Risk Management and Groupthink

When managing risk, we must consider all risk from all sources. A majority of the time identifying risk is trusted to a few individuals, although determining which risks are the highest priority is done in a collaborative environment, with managers, teams and groups of colleagues discussing the issues at hand. In this setting, it is important that the risk manager (the one whose job depends on the risk management results) recognizes and prevents any instances of groupthink.

Groupthink occurs when groups make decisions, and are willing (or unknown to the group) to take more risk than an individual would themselves. This post provides a general overview of causes and symptoms of groupthink, as well as measures that can be taken to avoid groupthink.

*Updated January 2014*

Groupthink was originally coined by Irving Janis, a research psychologist from Yale University. Janis identified three core causes for groupthink, which are:

1. High Group Cohesiveness: Groups of individuals that share a common bond tend to stick together. In the world of business, that common bond is generally the success of the organization. At times this will go deeper and a common bond might be a shared vision on how a marketing campaign should look, or maybe which vendor to select for IT services.
2. Structural Faults: Janis identified examples of structural faults as factors such as insulation of the group, a lack of impartial leadership, lack of norms requiring methodological procedures, and homogeneity of members’ social background and ideology.
3. Situational Context: The situation in question more time than not has a dramatic effect on the group mentality. Situational context according to Janis include elements such as highly stressful external threats, recent failures, excessive difficulties on the decision-making task, and moral dilemmas.

With an understanding of what causes groupthink, or the willingness to execute riskier decisions in collaborative decision making, we can now examine the symptoms of groupthink as identified by Janis.

• Overestimations of the Group: As a risk manager, if you recognize that the group is beginning to have illusions of invulnerability and unquestioned belief that the group is operating for the good of the organization, it is time to step in and slow things down.
• Closed-mindedness:  A symptom of groupthink is that warnings will be rationalized and those who oppose the groups decisions will be belittled or even considered stupid. As a risk manager, watch out for these signs, and don’t let members of the group get away with putting down warning signs from individuals.
• Pressures Toward Uniformity: When the group is discussing a topic, make sure all members provide input. Don’t allow self-censorship to occur or allow silence to be viewed as agreement. If there seems to be one person not talking, prompt them to provide their opinion. Once they do, make sure you address the second point as well.

We have suggested a few ways to address groupthink above. There are also measures that can be taken to prevent groupthink from occurring. The first step is to foresee groupthink’s occurrence. Groupthink is a social phenomenon and it is safe to assume it will occur at one point. Plan for it and be ready to stop it in its track.

Another preventative measure is to always have external perspectives and a “Devil’s Advocate” within the group. Identifying someone within the group who has the role of presenting opposing viewpoints and who is able to view things as an outsider can serve as a preventive measure to groupthink.

As risk managers, we must ensure risks are mitigated and proper opportunities are pursued. It is vital to step up and prevent groupthink from allowing risky decisions to be made simply because it is the consensus of the group.

We want to know what you think about groupthink. Please send your comments or questions to info@riskmanagementstudio.com or vistit our website.