Risk may be encountered by people on a daily basis -- the near-misses of tragedies that range from traffic accidents to natural disasters to space missions. Yet, one particular tragedy compelled associate professor of business
Robin Dillon-Merrill to begin conducting risk research.
Dillon-Merrill, who now works on risk analysis with
Catherine Tinsley, another associate professor at Georgetown’s McDonough School of Business, remembers hearing a presentation on the heat-resistant tiles that protect space shuttles during re-entry into Earth’s atmosphere.
In the 1990s, Dillon-Merrill, who received her master’s and bachelor’s degrees in systems engineering from the University of Virginia, was working on her Ph.D. at Stanford University, where she met Stanford researcher
Elisabeth Pate-Cornell.
Pate-Cornell, who later became Dillon-Merrill’s mentor, had been performing extensive risk analysis for the tiles NASA had decided to use and wrote a report warning about the risk of tile damage from debris shedding from a shuttle’s insulating foam. When the space shuttle Columbia disintegrated upon re-entry into the Earth’s atmosphere on Feb. 1, 2003, the foam was the culprit.
In the wake of the shuttle tragedy and the death of all seven astronauts on board, NASA managers, investigators and the public were left asking why nothing had been done to deal with a known risk.
“When we lost the space shuttle Columbia for a reason that was clearly identified in the risk analysis, it showed me something,” says Dillon-Merrill, who joined the business school in 2001. “There’s nothing wrong with the risk analysis tools. The issue was everything that had happened from when (Pate-Cornell) turned in her report to when we lost the Columbia and the many different launches when the foam fell off and didn’t cause any problems.”
Dillon-Merrill theorized that every time a shuttle mission ended without incident, NASA managers likely altered their feelings about the statistical probability of risk, even if the foam kept shedding and the probability of catastrophe had not changed. The Columbia Accident Investigation Report backed that idea, too, saying NASA may have grown complacent about the foam shedding.
Seeing an opportunity to learn from the tragic incident, Dillon-Merrill enlisted Tinsley’s expertise in the behavioral aspects of decision-making, and the two began to work together. Tinsley, who received her doctoral and master’s degrees from Northwestern University in organization behavior after earning her bachelor’s from Bryn Mawr College, has published extensively for journals on conflict management, psychology and business.
“What motivates us is that when failures happen, you get a huge investigation of everything,” says Tinsley, who joined the business school in 1996. “But failures are really costly. Can you avoid failures and find early warning signals by paying more attention to near-misses?”
Near-Missed OpportunitiesWith a $250,000 grant from NASA, Dillon-Merrill and Tinsley set out to explore why people don’t learn from near-misses. The resulting study, “How Near-Misses Influence Decision Making Under Risk: A Missed Opportunity for Learning,” was published in the August 2008 issue of the journal Management Science.
The researchers started with the idea that people interpret near-miss events not as near-failures, but as successes. If people view a near-miss as a success, focusing solely on the outcome instead of recognizing it could have led to disaster, they will lower their perception of risk. In turn, they will be more comfortable making risky decisions.
“When you’re faced with a near-miss, a close call, you can interpret it two ways,” Tinsley says. “You could say, ‘Wow, our system was really resilient because this thing missed, and we’re OK.’ Or you could say, ‘Wow, our system is vulnerable because we almost got hit.’ So whether you interpret the near-miss as a success or as almost a failure will influence how you view subsequent situations that have the same decision parameters.”
To test this idea, Dillon-Merrill and Tinsley set up a series of controlled experiments involving hypothetical scenarios. NASA managers, defense contractors and Georgetown students were asked to rate the decisions of Chris, a fictional project manager working on an unmanned spacecraft project.
Because of a tight schedule, Chris decided to skip peer review of an important instrument on the spacecraft. He also failed to investigate a design problem that could lead to catastrophic failure. Participant groups received different information about the mission’s success, failure or near-miss.
In the success scenario, the mission occurs without incident. In the failure scenario, chance alignment with the sun causes catastrophic malfunction of the instrument in question. In the near-miss scenario, chance alignment with the sun kept that instrument in the shade, so it did not malfunction.
People in the near-miss group rated Chris’ management of the project in a way that was statistically indistinguishable from how people in the success group rated Chris’ management of the project. In other words, people viewed a near-miss as a success rather than as a near-failure.
“The full learning value of near-misses will be realized only when they are separated from successes and examined to demonstrate not only system resilience, but also system vulnerability,” another of the professors’ studies conclude.
Building on Dillon-Merrill’s prior work in a mentorship program for the National Science Foundation, she and Tinsley received $300,000 from the foundation to examine why and how people decide whether to evacuate a hurricane zone.
For more than 40 years, the disaster research community has studied why people evacuate for hurricanes or choose to stay. This research has explored more than 70 variables, such as demographics, education and past experience.
“It really boils down to this,” Dillon-Merrill says. “If people feel safe, they stay, and if they don't feel safe, they go.”
A Hammer for Many NailsBecause risk is involved in so many decisions, near-miss research has the potential to reach far beyond space missions and natural disasters.
Dillon-Merrill and Tinsley talk about possible applications ranging far and wide. Near-miss information can help explain the current state of the economy, for example, and the behavior of financial institutions that engaged in risky investments. According to the professors, instead of managing risk and averting disaster ahead of time, everyone is looking backward to determine just what happened.
Although the research stems from large-scale crises, it also can benefit a manufacturing manager running an assembly line just as much as it can help a financial manager or a small-business owner. With the right understanding of near-misses, the researchers believe they can teach everyone to make better decisions in the face of risk.
“We think it has applications just about everywhere,” Tinsley says, “but of course that's because we have a hammer now, so everything is a nail."
This story appears in the Spring 2009 issue of Georgetown Business magazine.
