Examples Of Groupthink In Decision Making

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Groupthink – The way of making decisions within a group which often results in poor quality decision making. This occurs when people take to the beliefs /views of others without any intellectual reason. Herding – Even when you’re unsure of the situation and only have substantial knowledge, you assume that others have a clearer view of so you follow them, leading to what is known as the bandwagon effect. There are many reasons these may occur such as, wanting similar profits as competitors and in the event of insolvency if many of the banks have the same policies then closure is unlikely. These manifested in the banks because, as detailed in the Nyberg report, bankers were taking massive risks combined with little regulation which lead to the…show more content…
I feel that if this was put in place in more than one of the banks then groupthink would not have occurred. Devil’s Advocacy is when the organisation appoints a devil’s advocate to point out reasons why proposals should not be used. In the Nyberg Report we see many proposals being made and procedures being made without any hesitation regards to the decisions that this proposal or procedure would have, on not only the banks but the people who used and lended from these banks. By implementing an advocate, then they would voice their concerns about what was going on and therefore make others think of the consequences that decision would have had on the institution. All effective alternatives should be examined is another way of avoiding groupthink within the banks. As we can see in the Nyberg Report, Risk Management was not taken as seriously as it should have been. In subsection 2.9.5 it stated that “Bank management and boards seem to have been totally unprepared for both of their key risks (property loan impairment and funding problems) occurring simultaneously. If the banks decided at the beginning to make sure that all alternatives should be examined when it came to Risk Management then groupthink would not have…show more content…
A “plan B” plan is another way of making sure that if the main plan that the bank has is going wrong that the main people involved in the institutions can decide to scrap that plan and go forward with the contingency plan. This way of avoiding groupthink can be see when assessing risk. The risk management of an institution is a high priority when it comes to decision making and so if you assess all the risks for each plan, if or when one plan fails you have the other to fall back on and know where you need to do better. In the report risk management was not dealt as well as it should have been and so people within decided on the same option when making a decision for the

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