Making Decisions Under Uncertainty with Niklas Luhmann: Insights for Managing Emergencies

Introduction

This is the sixth post in my ongoing series about moving theory to practice in the management of incidents. This post focuses on the decision-making concept of uncertainty absorption relevant to anyone making decisions under uncertainty and especially to those making decisions about what others should do. I first came across the concept of uncertainty absorption in a chapter from David Seidl (2006) on the work of Niklas Luhmann. Seidl notes Luhmann borrows the concept from March and Simon (1993) who write

Uncertainty absorption takes place when inferences are drawn from a body of evidence and the inferences, instead of the evidence itself, are then communicated (p.186).

From March and Simon's (1993) explanation above, uncertainty absorption is a process where one draws inferences from available evidence and then communicates the inferences to someone else. Not communicated in the process is the evidence used to draw the inferences that could be used to indicate the level of uncertainty held in the communication as it is received. In this way, the uncertainty is absorbed in the communication and implicitly passed to others. With the concept of uncertainty absorption introduced, the discussion now turns to Luhmann's (2006) handling of the concept contextualized in decision-making.

Uncertainty Along the Horizon

The Theory

Luhmann makes the concept of uncertainty absorption readily applicable to the management of incidents by connecting it to decision-making.

An investment decision, for example, is based on information on the availability of financial resources, on current interest rates, on current market demand etc. Formulating this the other way around, one can say that a decision is “inferred” from the given information. Yet, the important point is that no decision can rely on complete information; some uncertainty inevitably remains. In our example, there is uncertainty concerning future market demand, investment projects of competing firms, future inflation figures etc. All this uncertainty, however, is absorbed by the decision (Seidl, 2006, p. 41; emphasis added).

Seidl then explains decisions "do not inform about the uncertainties involved in making the decision" (Seidl, 2006, p.41). As a result, decisions that connect to the decision where the initial absorption happened are only aware of the decision made and not the uncertainty involved in making it. The initial uncertainty is then absorbed by the following connecting decisions. In the words of Luhmann (2006), "Uncertainty absorption takes place, we can therefore say, when decisions are accepted as decision premises and taken as the basis for subsequent decisions" (p.96).

The Insight

I have to tell you everything I don't know.  As discussed in the above, decisions are made by drawing inferences from information. In the environment of an incident, there may be uncertainty surrounding the information available including how reliable and limited it is and how long it will be representative of the incident as it continues to evolve.

If working within a hierarchy such as the Incident Command System, the first decisions made at the top of the structure by the incident commander (or by the agency administrator as is the case in wildfire response) create premises for all following decisions that then connect to them (Seidl, 2006). First decisions made about strategy may absorb significant uncertainty as decision-makers may have only a working understanding of the incident itself. As these early decisions are made, the uncertainty absorbed within them rolls down the hierarchy as other decision-makers use the decisions made earlier as premises for their own  (Seidl, 2006). In this way, decisions down the hierarchy all connect to one another in such a way that the uncertainty absorbed in the earliest decisions is present all the way down to the operational level. Along the way down the hierarchy, additional uncertainty can be absorbed into this flow by subsequent decision-makers.

Some key insights from the concept of uncertainty absorption are the need to communicate areas of uncertainty to those who will base their own decision-making processes on the decisions already made as well as those who will translate the decisions of others throughout the hierarchy into action. A decision made, to some degree, evokes a sense of knowledge or of certainty. As the concept of uncertainty suggests, the presence of some amount of certainty may be surrounded by uncertainty. Luhmann (2006) goes as far as to say uncertainty is unavoidable. It is prudent then to communicate to others "This is what I reasonably think I know and this is everything I do not know." It is among the things that are not known where uncertainty is absorbed into the decision-making structure of the organization and can increase the level of uncertainty within operations. From the perspective of this concept, communicating the things that are not known is just as important as communicating the things that are known.  

Communicating the level of uncertainty that has been generated through the making and linking together of different decisions to those responsible for translating decisions into action should be seen as an imperative. The uncertainty generated by others in the decision sequence ultimately comes to rest on the shoulders of operators who may not be aware of the elements that were uncertain in the decision processes above them. In need of further discussion is the amount of uncertainty that can be absorbed before it becomes mandatory to tell operators. Like the concept of de minimis risk, there may be a level of de minimis uncertainty where it is not a matter of concern and seen as a norm of incident response. Surely, some degree of uncertainty is part of all decision-making and cannot be avoided. Practicality should be considered. Still, an ethical situation arises when considering the downward flow of uncertainty that falls to the operational level where it may not be recognized and the operators themselves did not have a hand in generating. There is a quandary here that may not be easily resolved that involves the desire to be practical and keep operations moving while also respecting the ethics involved in decision-making as it pertains to the rolling downhill of uncertainty.

References

Luhmann, N. (2006). The paradox of decision making. In  D. Seidl, K. H. Becker, D. Seidl, & K. H. Becker (Eds.), Niklas Luhmann and organization studies(pp. 85-106). Frederiksberg, Denmark:  CBS Press.

March, J., & Simon, H. (1993). Organizations. (Second ed.). Cambridge,  MA: Blackwell Publishers

Seidl, D. (2006). The basic concepts of Luhmann’s  theory of social systems.  In  D. Seidl, K. H. Becker, D. Seidl, & K. H. Becker (Eds.), Niklas Luhmann and organization studies(pp. 21-54). Frederiksberg, Denmark:  CBS Press.