Understanding the psychology of risk in the workplace

By Dr Nilufar Ahmed, Chartered Psychologist and Lecturer in Social Sciences at Bristol University

As leadership teams focus their efforts on strategic planning after a period of intense turbulence, solutions to help build resilience are the ‘holy grail’. Success requires full analysis of an organisation’s potential vulnerabilities. A key area often overlooked is the threat posed by human behaviour and error, which – whilst mostly unintentional - can cost both money and significant reputational damage. That is why, when it comes to medium term planning through a lens of hybrid working, it is vital that organisations rethink their approach to risk management.

According to new pan-European research from data storage and information management firm, Iron Mountain, organisations are being exposed to growing threats due to a lack of internal risk awareness. The survey of 11,000 employees found that as many as one in three (32%) claim to have made a “critical” error at work, and 14% have taken a risk which cost their organisation money.

Despite three quarters of employees believing risk management is vital to protecting sensitive information, half (49%) still consider it worth taking risks at work and as many as a quarter (25%) have fallen victim to scams or phishing.

An understanding of human psychology can help both explain and address this critical organisational risk factor.

Mounting pressure to cut corners

In the high-paced world we live in, ever greater risks are being taken in the effort to maximise efficiency. In sectors where there are elevated expectations for high quality service delivery, coupled with dwindling resources, risk taking can become normalised. In this context, individuals may rationalise cutting corners to provide services others rely on.

Unfortunately, as risk taking increases, so does the likelihood of errors, which can have far reaching consequences for both an individual and an organisation.

Natural bias towards optimism

When it comes to risk perception, we often display an optimism bias even when we are aware risks exist. According to Iron Mountain’s study, 34% of employees use the same password across multiple platforms, for example. Whilst we know it is something we shouldn’t do, we don’t think anything bad will happen to us personally. We are also creatures of habit and like familiarity because it offers us a sense of reassurance. The conviction we are safe results in us underestimating risk and overestimating the precautions we are taking to protect against it, particularly for every day, seemingly mundane, activities.

Mitigating the threats of hybrid working

In the survey, more than a third (36%) of employees admitted to being less security conscious at home than at the office. As such, new hybrid working models present an urgency in how data is managed, handled and protected. Given this is expected to be a standard operating model moving forward, organisations would do well to take these learnings into their long-term strategy conversations.

If employees are unaware of the dangers their actions may inadvertently be causing, these behaviours are likely to continue. This makes training on data management and security in hybrid environments essential. The most effective learning involves interaction, engagement, and reflection.

Secondly, whilst working from home has the potential to bring greater work/life balance for many, there is mounting evidence that without the traditional boundaries of work and home to moderate stress, there are greater risks for burnout and exhaustion. As fatigue accrues, motivation and engagement decline which in turn heighten the likelihood of making mistakes, further amplifying stress and anxiety. Increasingly, the organisations which prevail will be those who have prioritised building a strong culture, adapted to overcome the limitations of the laptop screen.

Resilient processes = resilient staff

More than half of all working days lost in the EU are caused by work-related stress and gender differences show women are more likely than men to experience stress at work. Iron Mountain’s findings support this, with women reporting feeling more stressed, worried, and panicked than male respondents if they felt they had made a critical error at work.

Having processes in place to reduce anxiety can improve wellbeing for all employees. Systems can create psychological safety and reduce worry, providing a layer of protection in the workplace. Resilient systems can lead to happier, more resilient staff, building confidence and translating into greater productivity and profitability.

To find out more about Iron Mountain’s research, click here.

¹Survey of 11,000 employees in 10 countries, conducted in September 2021 by One Poll.

Click on Download Resource to get our new Behavioural Psychologist Report on 'Errors at Work' study to explore how you can tackle the threat posed by human behaviour and error.