Imagine you walk into your office on a Monday morning and are instantly alerted to an emerging problem that requires you to make a high-risk decision. The outcome is uncertain and a wrong decision by you, could have a tremendous negative impact on your company.
How do you handle the situation?
Decision making under uncertainty
Leaders face such type of high-risk decision making regularly. Though some leaders manage the stress fairly well, others fall prey to making poor decisions and/or suffer physically and mentally from the effects of the high stress. Indeed, this stress is a chief reason so many executives suffer from insomnia, gastric ulcers, tension headaches and other physical and psychological ailments, and why many make bad decisions.
Stress and decision making Studies show that acute stress can impair decisions made under risk. Studies also show that individuals tend to make riskier decisions in response to stress, and that overall, stress conditions lead to decisions that can be more disadvantageous, more reward seeking (in an attempt to feel good or get a “high”), and more risk taking than nonstress conditions.
In other words, under high stress, individuals tend to make riskier decisions even while their ability to make decisions is actually impaired. It’s akin to deciding to drive a car when completely inebriated. Big risk. Bad decision.
The bigger the stress (which is dependent on the stressor type and the decision situation), the more influence it has on the brain , and the more likely disadvantageous decisions are made, according to science.