How your emotions can influence risk-related decision-making

March 13, 2023

 Affective and social neuroscience studies (*) are relevant to risk culture building in understanding how emotions influence risk-related decision-making. Research in affective and social neuroscience has shown that emotions can significantly impact how we evaluate and make decisions about risk.

For example, negative emotions such as fear or anxiety can lead us to perceive risks as greater than they actually are, while positive emotions such as hope or optimism can lead us to underestimate risks. Understanding the neurobiological basis of emotions can help organisations create a risk culture that considers the role of emotions in risk-related decision-making.

These studies are also relevant to risk culture building in terms of understanding how to effectively communicate information about risk and risk-related decision-making within the organisation. Research has shown that people are more likely to trust and cooperate with others when they feel that their social needs are being met. Therefore, understanding the neural basis of social interactions can help organisations foster a risk culture that promotes trust and cooperation among employees and encourages open and honest communication about risk.

The state of an employee's emotional health can significantly influence how the individual responds to a situation involving risk. 

Emotional health is the ability to understand and manage our emotions, thoughts, and behaviours healthily and productively. It is an important aspect of overall well-being and can significantly impact our relationships, work, and overall quality of life.

Some characteristics of emotional health include:

  • Self-awareness: Understanding and being aware of our own emotions, thoughts, and behaviours
  • Self-regulation: Being able to manage and control our emotions, thoughts, and behaviours in a healthy way
  • Motivation: Having the drive and determination to pursue goals and work towards our aspirations
  • Empathy: Being able to understand and connect with the emotions and experiences of others
  • Strong and healthy relationships: Being able to form and maintain positive and supportive relationships with others.

There is a link between emotional health and risk management in several ways. For example, individuals struggling with emotional health issues such as stress or anxiety, may be more likely to make mistakes or take unnecessary risks due to impaired judgment and decision-making abilities. On the other hand, individuals who are emotionally healthy and able to manage their emotions effectively may be better equipped to identify and assess risks and make more careful and thoughtful decisions.

In addition, a positive work culture that promotes emotional well-being can create a safer and more secure environment, reducing the risk of accidents or other incidents. When employees feel supported and can effectively manage their emotions, they may be less likely to engage in risky behaviours such as substance abuse or reckless decision-making.

Addressing emotional health as part of a risk management strategy can help create a safer, more productive, and more successful organisation. Maintaining emotional health often involves finding a healthy balance between our emotional, physical, and mental well-being. It involves caring for our physical health through proper nutrition, exercise, sleep and engaging in activities that bring us joy and meaning. It can also include seeking support from friends, family, or a mental health professional when needed.

Here are a few ways that leaders in organisations can work to improve the emotional health of their employees:

  1. Promote work-life balance: Encourage employees to take breaks, use vacation time, and disconnect from work when necessary.
  2. Foster open communication: Encourage employees to speak up if they feel overwhelmed, stressed, or struggle with mental health issues. Provide resources such as an employee assistance program or a mental health support hotline.
  3. Offer training and support: Provide stress management, communication skills, and emotional intelligence training to help employees better understand and manage their emotions.
  4. Encourage self-care: Encourage employees to prioritise their well-being by taking breaks, exercising regularly, eating well, and getting enough sleep.
  5. Create a positive work environment: Make sure that the work environment is welcoming, supportive, and respectful. This can involve providing a comfortable and pleasant workspace, recognising and rewarding employee contributions, and addressing any issues or concerns that employees may have.

People with good emotional health are typically better equipped to handle difficult situations and challenges, as they can manage their emotions, thoughts, and behaviours healthily and productively. This can involve finding healthy ways to cope with stress, seeking support from others, and staying focused on their goals and values.

On the other hand, individuals with poor emotional health may be more prone to negative reactions and behaviours in the face of risk. They may struggle to cope with stress, make unhealthy choices, or become overwhelmed by their emotions. This can make managing and navigating situations involving risk more challenging. Overall, maintaining good emotional health can be an important factor in helping us to manage and respond to situations involving risk effectively. It can help us to stay focused, make informed decisions, and find healthy ways to cope with stress and challenges. 

*Affective neuroscience is an area of research that focuses on the neural bases of emotions and assumes a role of great relevance for emotions and affects the modulation of cognition and behaviour.

*Social neuroscience is the interdisciplinary field devoted to studying these neural, hormonal, cellular, and genetic mechanisms and, relatedly, to studying the associations and influences between social and biological levels of an organisation.

*Horst Simon, is Business Risk Officer at Capricorn Group

Rate this item
(0 votes)
Last modified on Monday, 13 March 2023 20:02

Joomla! Debug Console

Session

Profile Information

Memory Usage

Database Queries