Choosing Between Risk and Certainty

Judgment in Managerial Decision Making

Managerial Decision Making: Certainty, Uncertainty, and Risk

Making decisions is a vital part of both personal and professional life. When a manager has to make decisions, he or she needs to weigh certainty, uncertainty, and risk (Robbins & Judge, 2007). My attitude about these three different areas of consideration has helped my ability to make rational decisions, in most cases. That is because I tend to be very risk-averse. I am not a gambler, and I do not like to take big chances with anything. That may not always provide me with the highest possible return, but it does lower the chances of putting too much at risk and struggling because of it. In order to realize the value of that, it is important to understand how it works when a person has to consider three different areas in making managerial decisions. The choice between certainty and uncertainty is relatively clear cut in some cases, but can also leave room for interpretation (Bazerman & Moore, 2008). Being certain of something is only accurate if a person really knows all the facts, and if those facts are truly accurate (Bazerman & Moore, 2008).

A person can be provided with all kinds of facts, but if they are wrong or if they are not complete, that person will not have the certainty he or she was expecting when making a decision. In business, it is vital that a manager has as much certainty as possible (Robbins & Judge, 2007). That is important because he or she is not just making personal decisions, but choices that could affect an entire company and all the people who work there. There will be some uncertainty in these decisions, of course, because life is never 100% certain, but the goal is to maximize certainty and limit uncertainty (Robbins & Judge, 2007). When that is done properly, it lowers risk in any business situation and helps to protect everyone involved in the decision.

When a person does not take any risks at all, he or she may end up avoiding areas of life that could be lucrative, and that is especially true from a business or management capacity. Risk takers are needed, to a certain extent, but risks have to be calculated (Bazerman & Moore, 2008). Otherwise, there is simply too much uncertainty in them to provide success for a person or a company. Certainty, uncertainty, and risk are all tied together strongly, and a person in a management position must know how to address each of these issues both together and independently if he or she is going to be successful. Managing and leading are not the same thing, really, because a manager is not always a good leader, and someone who is good at leading will not always end up in a management position. Whether a person is good at leading and managing people is often based on how much risk he or she is willing to take, and how much he or she understands the correlation between that risk and the uncertainty or certainty of a situation (Bazerman & Moore, 2008).