Organizational Risk Management

Managing for Uncertainty and Ambiguity

Krista N. Engemann, Kurt J. Engemann, Cliff W. Scott, Krista N. Engemann, Kurt J. Engemann, Cliff W. Scott

• Publisher: De Gruyter
• Year: 2022
• eBook ISBN: 9783110670240
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

Every organization faces difficult decisions when managing risk and the potential consequences of its manifestation. For a more thorough outlook on risk, organizations should also evaluate and engage with its advantages. Organizational Risk Management: Managing for Uncertainty and Ambiguity covers a series of perspectives that represent both causal and interpretative frameworks. These perspectives shed light on how organizational structures and processes adapt amid a complex, dynamic organizational environment in an effort to manage and exploit the accompanying risks of that environment.

This volume will oftentimes challenge the expectation for and utility of clarity in crisis situations, thereby favoring uncertainty and ambiguity as the necessary conditions to exploit organizational risk and explore opportunities that rely on interpretation, learning, and knowledge among individuals.

The ultimate objective of Organizational Risk Management: Managing for Uncertainty and Ambiguity is to promote discussion among practitioners and organizational scholars who venture to understand organizational risk. Setting such a goal is to essentially practice what this volume shall inevitably preach: engage one another in order to proactively monitor and respond to risk. Strengthening ties along the bridge between practice and science will be a welcomed consequence of this volume.

Part I: Fundamentals

1 Organizations helping their members manage risk

Keri K. Stephens

Cassidy S. Doucet

1.1 Introduction

To ground this chapter, we develop the following scenario derived from an informal interview with a manager in June of 2020 as the COVID-19 lockdown was being lifted in the United States. Elaine, a manager at a retail store sits down at her computer to read yet another email from her company. The email from the store’s CEO reads, “You are required to wear a mask that covers your nose and mouth completely at all times in and around our buildings. Note: this is a new policy, and a change from what was required last week.” Elaine sighs and tells her partner, “I’m so tired of having a different policy every week. I suspected we needed to wear masks even when the U.S. Center for Disease Control said they weren’t required.”

The COVID-19 Pandemic will likely go down in history as a crisis where the understanding of the science involved was changing almost constantly. This makes it difficult for employees to cope because instructions for how to manage their risks and stay safe are constantly changing and people receive many conflicting messages. This is the epitome of Weick’s (1995) concept of equivocality, which he defined as people receiving multiple conflicting messages. While the COVID-19 Pandemic is not the first major crisis where organizations have had to help their members make sense of complex information, what makes it unique is the extended nature of this crisis.

In this chapter, we review the theories and concepts that explain an organization’s role in helping employees manage risks, and the challenges these organizations face when trying to communicate with employees who are living in our ever-connected world. We begin by defining what we mean by risks, and how Weick’s (1979, 1995) information theory is useful to lay the foundation for understanding sensemaking processes as well as information overload. Organizational communication theories, such as organizational identification, provide theoretical explanations for why some members care about the messages organizations send them. By combining behavioral theories from the fields of risk communication, health communication, and disasters, we build a comprehensive conceptual model that will help scholars conceptualize how organizations can help their members manage risk. The constructs within the proposed model are relevant when exploring how employees become aware, understand, and make decisions about their risk.

1.2 Core constructs in understanding risk in organizations

Risk can be defined in many ways, so here we use Stern and Fineberg’s (1996) broad definition of risk as the “things, forces, or circumstances that pose danger to people or what they value” (p. 215). It is also helpful to realize that risk can be subjective, objective, real, observed, and perceived (Althaus, 2005) and thus, people and organizations can differ in their understanding of what constitutes a risk. In addition to understanding risk, several related constructs are also important. Risk perception can be considered as an individual’s subjective judgement of the severity of the risk, the probability of the event happening to them, and the emotions they feel in response to the risk (Wilson et al., 2018).

Typically risk perception is studied from an individual-level perspective with research questions asking how individuals seek information to understand and potentially take actions related to risks (e.g., Planned Risk Information Seeking Model, PRISM; Protection Action Decision Model, PADM), or how people take actions based on health-related risks (e.g., Health Belief Model, HBM; Theory of Planned Behavior, TPB). More recently, scholars interested in disaster-related risks have borrowed from behavioral risk theories and added in considerations of community by arguing that more lasting behavioral changes need to focus on communication efforts designed to build community resilience (Houston, 2015).

Here, we contribute to notions that collective actions can be important ways to address risk. Specifically, organizations help their members understand and cope with a variety of risks especially related to workplace safety. In the U.S., two different organizations ensure that workers are protected: The Occupational Safety and Health Administration (OSHA), and the National Institute for Occupational Safety and Health (NIOSH). Most employers offer training to help employees understand their safety risks and reduce negative outcomes. Another example of a formal organizational program designed around preventative health risks is a Workplace Health Program (WHP). These programs often focus on helping employees stay physically and mentally strong, and they are often justified as a means to reduce the healthcare costs of employees (Stephens & Harrison, 2017). Yet beyond these formal organizational programs, there are many opportunities for organizations to communicate health and safety risk information more broadly through communication channels, such as email, a prevalent practice during the COVID-19 Pandemic (Stephens et al., 2020).

To better understand the role organizations can play in helping their members manage risk, we developed a conceptual model (see Figure 1.1). While we elaborate on this model in the following sections of this chapter, we preview it here to provide a big picture understanding of the relationships between the concepts. Specifically, the left side of the model provides examples of the organizational communication structures and theoretical considerations important in better understanding employee risk decisions. The remainder of the chapter begins by explaining how people process information related to risks. Then, we explain each part of the model. As a whole, The Conceptual Model of Organizational Influences on Employee Risk provides a framework for understanding organizational actions, as well as providing a roadmap for future research.

Figure 1.1: Conceptual Model of Organizational Influences on Employee Risk.

1.3 Risk information processing

Before people seek information about a risk, there needs to be some form of social or environmental cue that makes them aware they are at risk. In the case of Elaine, the retail manager, the cue was an email from her manager. But it is important to realize that just providing information from an organization or other source is not enough to motivate people to take some protective actions concerning these risks. Weick’s (1979) work on information theory offers some key terms to help us understand what happens as organizational members process risk information. Once people are aware of a risk, they are often in need of information; a situation Weick (1979) calls uncertainty. As people begin receiving and seeking information, they tend to receive conflicting information, and thus they find themselves experiencing equivocality or ambiguity (Weick, 1979) around their understanding of risk. This is an important state because as people try to understand this conflicting information, they tend to talk with others and engage in sensemaking (Weick & Sutcliffe, 2007). During COVID-19, there were high levels of both uncertainty and conflicting information, and these were key precursors that nudged people to engage in sensemaking. Sensemaking is a process that allows organizational members to develop meaning and understanding, retrospectively, following an experience (Weick, 1993, 1995). Organizations are in an ideal place to facilitate sensemaking since organizational members are often connected to one another through varied communication channels (Jahn, 2016; Weick, 1979).

The flip side of uncertainty and employees not having enough information is information and communication overload. On the surface, overload seems like an issue of quantity of information – having too much; however, research has found it is much more complex. The perceived quality of that information is also important (Eppler & Mengis, 2004; Stephens et al., 2017; Weick, 1970), as well as several highly communicative factors. Stephens et al. (2017) found that communication overload also involves understanding how pressured people feel to make decisions, and if they perceive needing to use too many information and communication technologies, have too many distractions, feel responsible to respond to messages, and are watching messages pile up.

Both information and communication overload are important concepts when discussing risk because when people are overloaded it affects their decision-making ability, and their f...

Table of contents

• Title Page
• Copyright
• Contents
• Part I: Fundamentals
• Part II: Applications
• Index
• Developments in Managing and Exploiting Risk