Risk is perceived by each human being in the subjective way, that is why managers should during decisions taking base on comparison of valid limits and reports supplied by risk controlling (describing their risk exposures). Reports are crucial to evaluate the potential deviations from expectations. Range and kind of this information have significant impact on decision making. Decisions are taken on two levels:
1) rational,
2) personal-emotional.
Risk controlling should create proper frames for decisions taking in order to match the impact of first level with company strategy. The result should be the maximization in the expected utility and elimination of unwelcome influence of the second level. There should be first defined criteria for decisions taking that are basis for risk taking and should contribute to maximize expected added value creation. It should be matched with adjustment action during the plan execution in order to adapt to changed conditions. The decisions freedom should be regulated by limit system and return on capital.
Fear of possible losses influences usually stronger on managers’ behavior than possibility of high profits. The rationalization of decisions taking by its synchronization with company targets makes subjective characteristics working in line with expectation of value creation: there should be assumed that each manager makes hierarchy of decision alternatives following his preferences and official guidelines for risk taking – there should be eliminated risk aversion to the risk economic justified by stating proper motivation mechanism.
Creation of the methodological basis that should determine the permissible set of decisions results and feedback mechanisms should lead to eliminate possible exceeding of this acceptable results set (e.g. limit) that could be result of inappropriate knowledge or intuition. Hence, the necessity of comprehensive methodology of evaluation of decision taking.
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