The Human Element:
Understanding Human
Performance Impact on Risk
Management
TLT018
Speaker:
• Shari Heino, Manager of Risk and Compliance,
Brazos Electric Power Cooperative, Inc.
How Humans Make Mistakes
Learning Objectives
During this session, we will:
• Discuss how our cognitive biases may affect our
ability to make effective decisions about risk.
• Look at a real-world example of accommodating for
human limitations in business operations.
• Consider the benefits of a corporate culture that is
understanding of the realities of human
performance
Cognitive
Biases
Definition: A cognitive bias refers
to a systematic pattern of
deviation from norm or rationality
in judgment, whereby inferences
about
other
people
and
situations may be drawn in an
illogical
fashion.
Haselton, M. G., Nettle, D., & Andrews, P. W. (2005). The evolution of
cognitive bias. In D. M. Buss (Ed.), The Handbook of Evolutionary
Psychology: Hoboken, NJ, US: John Wiley & Sons Inc. pp. 724–746.
Just to name a few: distinction bias, empathy gap,
endowment effect, focusing effect, framing effect,
gambler's fallacy, IKEA effect, loss aversion, neglect
of probability, negativity effect, omission bias,
overconfidence effect. See Wikipedia’s list of
cognitive biases.
Identifying cognitive biases,
Scenario 1
The U.S. is preparing for the outbreak of an
unusual disease, which is expected to kill 600
people. Two alternative programs to combat the
disease have been proposed. Assume that the
exact scientific estimates of the consequences
of the programs are as follows: If program A is
adopted, 200 people will be saved. If program B
is adopted, there is a one-third probability that
600 people will be saved and a two-thirds
probability that no people will be saved. Which of
the two programs would you favor?
Identifying cognitive biases,
Scenario 2
The U.S. is preparing for the outbreak of an
unusual disease, which is expected to kill 600
people. Two alternative programs to combat the
disease have been proposed. Assume that the
exact scientific estimates of the consequences
of the programs are as follows: If program C is
adopted, 400 people will die. If program D is
adopted, there is a one-third probability that
nobody will die and a two-thirds probability that
600 people will die. Which of the two programs
would you favor?
Probability Quiz
Q. You have been offered a free ticket for a
lottery with a $10 million dollar jack pot if you
pick all 6 numbers correctly (1 through 40).
Which 6 numbers do you chose?
A.
B.
C.
D.
123456
5 10 15 20 25 30
7 11 23 29 31 37
The numbers from your birthday
and your dog’s birthday
Probability Quiz, part 2
Q. You have tossed a coin four
times and it has come up heads
each time. What are the odds it
will come up heads on the next
toss?
Count the Fs in the following sentence.
Take your time, but only count once:
FINISHED FILES ARE THE RESULT OF
YEARS OF SCIENTIFIC STUDY COMBINED
WITH THE EXPERIENCE OF YEARS.
Managing Cognitive Biases
• Rephrase percentages – example, use 1
in 10 instead of 10%.
• Reframe projected results to understand
implications of losses.
• When discussing a new idea, designate
at least one person to be the challenger
of that idea.
• Learn more about cognitive biases.
Real World Example – Adapting for Human
Limitations in the Control Room
• About 5 am, February 2, 2011, during a system emergency, ERCOT
(Texas grid operator) issued the following verbal directive: “Do not take
units off-line while ERCOT is in emergency operations […].”
• About 8 am the same day, while the system emergency was still in effect
(although restoration of off-line load had begun), a Brazos operator
instructed removal of a small hydroelectric resource from service in order
to conserve water.
• Realizing the mistake 2 minutes later, the Brazos operator requested the
hydro facility operator return the off-line unit to service, but the unit then
could not restart for 30 minutes.
• During the course of the above events, ERCOT was not contacted to
request permission to remove the unit. Therefore, Brazos self-reported a
potential violation for failure to comply with an ERCOT directive.
11
Traditional Compliance
Violation Mitigation Efforts
• Re-training staff
• Disciplinary action
• Fines to entity
These are the type of mitigation efforts that have
been expected in the past. But this problem was
not simply an issue with a single individual.
12
New mitigation idea – fix the
system, not the individual
• Proposed during settlement discussions
regarding the self-reported possible violation
(reduced fine)
• Goal: increased operator awareness of ongoing ERCOT instructions via dedicated
monitors
• Installed
monitors
displaying
ERCOT
emergency instructions very visible and close
to phones at QSE and plant control rooms allows double-checking by plant and control
room staff regarding ERCOT instructions
13
Monitor for each control room (plant and
control room) – Normal Conditions
14
Monitor for each location –
Alert Active
15
Having a Corporate Culture Which
Acknowledges Realities of Human
Performance
• Sometimes referred to as “Just Culture”
• Acknowledges that humans makes mistakes
and develops systems to reduce potential
mistakes
• Expects accountability, but focus is learning
from errors, not punishment
• Positively reinforces proactive behavior in
identifying and reporting risks
• Demonstrates respect for all employees
Benefits of a Human Performance
Focused Corporate Culture
• Increased innovation
• Increased productivity
• Increased employee
retention
• Example: Google’s Oxygen
Project
Recommended Reading
• Thinking Fast and Slow by Daniel Kahneman
• Inviting Disaster: Lessons From the Edge of
Technology by James R. Chiles
• Behavioral Economics: When Psychology and
Economics Collide, audio lecture series
presented by Professor Scott Huettel (The Great
Courses)
THE END