Policies for Effective Risk Management Performance through Goal Setting

L.S. Chien, B.B. Schweig and P.L. Yu

Journal of Insurance Issues, 1989, vol. 12, issue 2, 110-126

Abstract: The organizational behavior and management science literature dealing with multiple criteria decision making, suggests that making policies for effective risk management performance through goal setting can in theory be treated as setting-up a complex multiple criteria optimal control system in which the control variables are (1) selecting a set of measurable goals (2) determining goal achievement levels and (3) constructing supportive systems; and the objectives are (i) to maximize time allocation to the risk management task or work assigned and (ii) to maximize the efficiency and effectiveness of performing the task safely. … Utilizing the concepts of human behavior mechanisms and habitual domains, the authors offer a general principle of policy making for effective risk management performance. Loss reduction can be achieved by selecting appropriate control variables for the purpose of creating favorable working conditions, high levels of psychic and physiological charges, and sufficient confidence levels so that performers (workers, managers, or others) will allocate as much time as possible to perform the desired job-related operations in the most efficient, effective, and safe way. A detailed discussion of how to apply this principle over various classes of safety concerns is given. The paper concludes with some empirically known results of goal setting effects on performance.

Date: 1989
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