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UNCERTAINTY AND YOUR BRAIN
Handling risk in an agile environment
TAC conference 2019
Wayne Hetherington
Agile Coach
at agile42
Vivian Xu
Scrum Master / IT Project Manager
at BMO
Presenters
1
2
3
Open a browser on any laptop, tablet or smartphone
Go to http://etc.ch/eBWh
Answer the three questions
Live Poll Quiz: Busting Brain Myths
https://directpoll.com/r?XDbzPBd3ixYqg8uaeBAdQQpzmHAcSh5kAjPp0e7gE
Uncertainty and Your Brain
Thinking Fast and Slow
Daniel Kahneman
Predictably Irrational
Dan Ariely
Introduction
Bias
Confirmation Bias
Heuristic
Availability Heuristic
Fallacy
Conjunction Fallacy
Illusion
Illusion of Transparency
Paradox
Cobb’s Paradox
Basic Cognitive Terms
Risk Management
Identify
Threat, failure, loss, exposure
Assess
Risk-exposure factor = (% probability of loss) * (size of loss in weeks)
Manage
Accept, Avoid, Control, Transfer, Monitor
Ultimatum Game
Rules of the Game
• Pick a partner.
One will be the “Proposer”
The other will be the “Responder”
• The Proposer will be granted $10 of play money.
• The Proposer will have to share the money with the Responder.
Decide how much money to offer the Responder.
Make the offer.
• The Responder can either accept or reject the proposal.
If the offer is accepted, you both keep the money.
If the offer is rejected, nobody keeps any money.
Risk Biases
Endowment Effect
Peltzman Effect
Sunk Cost Fallacy
Which do you think is a better
improvement?
• Increase 60% to 65%
• Increase 0% to 5%
• Increase 95% to 100%
Certainty Effect
Possibility Effect
Prospect Theory
Four Fold Pattern
High Probability
(Certainty Effect)
Low Probability
(Possibility Effect)
Gains Losses
95% Chance to WIN $10000
Fear of disappointment
(accept a settlement)
Risk Averse
95% Chance to LOSE $10000
Hope to avoid loss
(take the risky operation)
Risk Seeking
5% Chance to WIN $10000
Hope of a large gain
(buy a lottery ticket)
Risk Seeking
5% Chance to LOSE $10000
Hope to avoid loss
(buy insurance)
Risk Averse
Knowledge
gained in the
first 25% of
the product
38.75% more
knowledge
gained during
the product
Cone of Uncertainty
[Craig Gmyrek https://dzone.com/articles/uncertainty-knowledge-and-scrum-sprints]
https://blackswanfarming.com/the-problem-with-projects/
Cost of Delay
How to Handle Risk
Tactical Approaches to Risk
Six Thinking Hats
http://www.debonogroup.com/six_thinking_hats.php
TRIZ
Liberating Structures
http://www.liberatingstructures.com/6-making-space-with-triz/
Pessimist Day
What it is What it is not
High level (epic) Too detailed (story)
Quick and
lightweight
A risk log
Awareness Solutions
Critical Negative
Schedule 1 day as part of high-level
planning where program teams can
collaborate with the risk department.
Break into groups to consider up coming
high level features with a Black-hat
approach.
Please leave us your feedback!

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Uncertainty and your brain

  • 1. UNCERTAINTY AND YOUR BRAIN Handling risk in an agile environment TAC conference 2019
  • 2. Wayne Hetherington Agile Coach at agile42 Vivian Xu Scrum Master / IT Project Manager at BMO Presenters
  • 3. 1 2 3 Open a browser on any laptop, tablet or smartphone Go to http://etc.ch/eBWh Answer the three questions Live Poll Quiz: Busting Brain Myths https://directpoll.com/r?XDbzPBd3ixYqg8uaeBAdQQpzmHAcSh5kAjPp0e7gE Uncertainty and Your Brain
  • 4. Thinking Fast and Slow Daniel Kahneman Predictably Irrational Dan Ariely Introduction
  • 5. Bias Confirmation Bias Heuristic Availability Heuristic Fallacy Conjunction Fallacy Illusion Illusion of Transparency Paradox Cobb’s Paradox Basic Cognitive Terms
  • 6. Risk Management Identify Threat, failure, loss, exposure Assess Risk-exposure factor = (% probability of loss) * (size of loss in weeks) Manage Accept, Avoid, Control, Transfer, Monitor
  • 7. Ultimatum Game Rules of the Game • Pick a partner. One will be the “Proposer” The other will be the “Responder” • The Proposer will be granted $10 of play money. • The Proposer will have to share the money with the Responder. Decide how much money to offer the Responder. Make the offer. • The Responder can either accept or reject the proposal. If the offer is accepted, you both keep the money. If the offer is rejected, nobody keeps any money.
  • 8.
  • 9. Risk Biases Endowment Effect Peltzman Effect Sunk Cost Fallacy Which do you think is a better improvement? • Increase 60% to 65% • Increase 0% to 5% • Increase 95% to 100% Certainty Effect Possibility Effect
  • 10. Prospect Theory Four Fold Pattern High Probability (Certainty Effect) Low Probability (Possibility Effect) Gains Losses 95% Chance to WIN $10000 Fear of disappointment (accept a settlement) Risk Averse 95% Chance to LOSE $10000 Hope to avoid loss (take the risky operation) Risk Seeking 5% Chance to WIN $10000 Hope of a large gain (buy a lottery ticket) Risk Seeking 5% Chance to LOSE $10000 Hope to avoid loss (buy insurance) Risk Averse
  • 11. Knowledge gained in the first 25% of the product 38.75% more knowledge gained during the product Cone of Uncertainty [Craig Gmyrek https://dzone.com/articles/uncertainty-knowledge-and-scrum-sprints]
  • 14. Tactical Approaches to Risk Six Thinking Hats http://www.debonogroup.com/six_thinking_hats.php TRIZ Liberating Structures http://www.liberatingstructures.com/6-making-space-with-triz/ Pessimist Day What it is What it is not High level (epic) Too detailed (story) Quick and lightweight A risk log Awareness Solutions Critical Negative Schedule 1 day as part of high-level planning where program teams can collaborate with the risk department. Break into groups to consider up coming high level features with a Black-hat approach.
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