Keywords: decision making, globalisation, knowledge economy, context, uncertainty, cognitive neuroscience, incomplete knowledge, judgment, risk management, programme management, economics, benefit-cost analysis, infrastructure projects
Decision-making and risk management in a globalised knowledge economy
This paper presents an exposition of the role of knowledge, empiricism within the domain of knowledge, and the role of judgment in decision-making and risk management. The concept of risk management is explained with an example of programme management for infrastructure project delivery. Drawing upon the lessons from economics, cognitive neuroscience, the history of management, and education, this paper presents a framework of theory, empirical evidence, and judgment to understand decision-making in the face of uncertainty. The author notes that decision makers must utilize knowledge and clearly identify the threshold between the use of knowledge and the exercise of judgment in decision-making. Further, knowledge comprises theoretical coherence and empirical evidence along with an awareness of the context in which coherence and empiricism apply. The paper concludes that understanding the role of theory, empirical evidence, and judgment in their proper context is necessary for risk management in the competitive global landscape because the consequences of many decisions materialise well into the future or in far corners of the world. A discussion of the nuanced nature of knowledge and the interplay between incomplete knowledge and judgment in the face of uncertainty is the main contribution of this paper to the literature.