BACHELOR OF INFORMATION TECHNOLOGY

SEPTEMBER 2021 SEMESTER

BBPP 1103

PRINCIPLES OF MANAGEMENT

MATRICULATION NO : 021019081094001
IDENTITY CARD NO. : 021019081094
TELEPHONE NO. : 012-9602851
E-MAIL : yaphuimun@oum.edu.my
LEARNING CENTRE : IPOH LEARNING CENTRE

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TABLE OF CONTENTS PAGE
1.0 INTRODUCTION OF AMBANK GROUP 3

2.0 COMPARISON OF DECISION-MAKING 4

2.1 Decision Making In Certain Conditions 4
2.1.1 Savings Accounts 5
2.1.2 New Branch 5
2.2 Decision Making In Uncertain Conditions 5
2.2.1 Credit Card Sales Agent 6
2.2.2 Investment 6

3.0 DECISION-MAKING IN RISKY CONDITIONS 7

3.1 Credit Risk 7
3.2 Market Risk 8
3.3 Operational Risk 8-9
3.4 Compliance Risk 9

4.0 GROUP DECISION-MAKINGMETHODS 10

4.1 Brainstorming 10-11
4.2 Nominal Group Technique 11
4.3 Delphi Technique 12

5.0 METHODS TO INCREASE EFFECTIVENESS OF 13

DECISION-MAKING
5.1 Big-bet Decision 13-14
5.2 Cross-cutting Decision 14
5.3 Delegated Decision 14

6.0 CONCLUSION 15

REFERENCES 16-17
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1.0 INTRODUCTION OF AMBANK GROUP

Figure 1.1: AmBank Group

Source: (AMBANK, 2012).

AmBank Group is a leading financial services group with over 40 years of expertise in
supporting the economic development of Malaysia. The Group was listed on the Main
Market of Bursa Malaysia in 1988. It is the sixth-largest banking group by assets in
Malaysia, founded in 1975, with a market capitalisation of around RM9 billion and assets
of RM170.2 billion as at 31 March 2021. AmBank Group serves over three million
individual and corporate customers. It provides services in wholesale banking, business
banking, retail banking, investment banking and related financial services which include
Islamic banking, general insurance, life insurance, family takaful, stock and share
broking, futures broking, investment advisory and management services in assets, real
estate investment trust and unit trusts.AmBank Group, which is a public company,
employs over 9,000 people which company sizes are in 5001-10,000 employees.
(Berhad, n.d.).

In my report, I would be discussing decision-making in certain, uncertain, and risky

conditions that occur in AmBank Group, three types of group decision-making methods
as well as methods to increase the effectiveness of decision-making in AmBank Group.

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2.0 COMPARISON OF DECISION-MAKING

Figure 2.1: Decision-Making Conditions

Source: (Wicaksana, 2013).
In the decision making environment, there are three categories that is decision in certain
condition, in uncertain condition and also in risky condition. The certain condition in
making decision is where we have confidence and belief to get the best outcome in a
single answer. Meanwhile, uncertain condition in making decision is when the decision
maker does not have knowledge of information where it is impossible to accurately
describe for future outcome. (Decision Making Condition & Example, 2016).

2.1 Decision Making In Certain Conditions

According to Harold. K (2009), decision making in certain condition implies that we
know with 100 percent accuracy what the states of nature will be and what the expected
payoffs will be for each state of nature. With certainty, decision maker assume that all of
the necessary information is available to assist them in making the right decision, and
they can predict the outcome with a high level of confidence. Decision making in certain
condition also occur when we know all information about alternatives and the best
chosen one is the most effective. (Decision Making Condition & Example, 2016).

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2.1.1Savings Accounts
There are several examples of the certainty condition in a different kind of situation. One
of the examples is during choosing several choices of saving accounts to fulfill
customers’ requirements. For instance, True Savers Account is part of the True Deposit
Account that comes with a True Transact Current Account and a True Debit MasterCard
with a minimum initial deposit of RM20, however, Everyday Saving Account has the
convenience of a free monthly statement with a higher minimum initial deposit of
RM200, while Basic Saving Account requires low minimum age and initial deposit of
RM20 with low-interest savings. With limited time and information available, the
rational decision-maker of AmBank Personal Banker can know the most suitable choice
of saving account for a customer that requires and make the decision easily.

2.1.2 New Branch

Another example of making decisions in certain conditions is to set up a new branch.
AmBank Group is looking for a suitable premise for which the budget is RM 300,000.
Premise option A locates in a new business center in the urban area, but the price is
higher than the expectation that is RM 500,000, while premise option B is also located in
a new business center in the urban area, but the price is lower than the expectation that is
RM 500,000. Meanwhile, option C locates in a new business center in the rural area with
a less amount that is 280,000. From the information, the company can make a decision
using its budget limitation and also time-saving to set up a new branch.

2.2 Decision Making In Uncertain Conditions

Decision making in uncertain condition is when there are many unknowns and no
possibility of knowing what could occur in the future to alter the outcome of a decision.
According to Martin T. Schultz et al (2010), uncertainty can be classified as input
uncertainty and model uncertainty. Input uncertainty arises from a lack of knowledge
about the true value of quantities used in analyzing a decision. In practice, model
uncertainties are much more difficult to deal with than input uncertainties because they
require the analyst to propose and evaluate competing models. (Decision Making
Condition & Example, 2016).
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2.2.1Credit Card Sales Agent
Credit Card Sales Agent normally promotes credit card products via social media
platforms on the Internet or through telemarketing methods. An agent has several
incentive packages by selling different types of credit card with incentives of RM20 to
RM100 each card. Nevertheless, the agent is unsure whether there will be sufficient
demand for credit card in his market segment which incentive depends on the market. In
this situation, the agent does not have any information to help him decide which is hard
for him to decide each probability that he made. Therefore he must use his rationale and
his business experience to make the best choice in order not to make his company lose in
profit.

2.2.2Investment
Apart from that, there will be many uncertainties in risky investments. Decision of
customers has been framed as a choice between guaranteed returns investment and
alternative unit trust investment. Although the information is not obtained as part of the
decision-making process, customers may use past experience and information to make
the decision. In this example, the profits from guaranteed returns investment may exceed
the returns from the alternative unit trust investment due to the uncertainty condition of
alternative unit trust investment which depends on the market situation. Therefore, the
customer who wishes to invest must reach a decision on it.

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3.0 DECISION-MAKING IN RISKY CONDITIONS
In a risky situation, factual information may exist, but it may not be complete. Rowe, W
(1988) believed that decision making under risk is whenever the decision-maker has
some knowledge regarding the state of nature, the person may be able to assign
subjective probability estimates for the occurrence of each state. Shahrul A.A (2011)
suggested that the decision-maker will not know the situations that will occur in the
future and minimal information will only give some insight in predicting what will occur.
The situation will happen or otherwise, cannot be completely ascertained. With limited
resources and information, decision-makers make the right decision to avoid any losses
or damage. (Decision Making Condition & Example, 2016). According to (AmBank
Group, 2017), the discussion of decision-making in risky conditions are described as
below:

3.1 Credit Risk

One example of a risky decision that can be seen is credit risk. The risk of financial loss
resulting from a counterparty failing to fulfill its obligations, or from a decrease in the
credit quality of a counterparty resulting in a loss in value. Fortunately, AmBank Group
has a robust credit management framework to manage credit risk. The effectiveness of
the credit risk management framework is assessed through various compliance and
monitoring procedures. The robust credit management framework is an example of the
need for a more formal approach to risk-based decision making and also risk
management in credit risk.

Figure 3.1: Credit Risk

Source: (Credit Risk Management in Banking, n.d.)
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3.2 Market Risk
Another example of a decision made under risky conditions is market risk. Market risk is
a risk that stems from AmBank’s trading and balance sheet activities being the risk to the
Group’s earnings arising from changes in interest rates, foreign exchange rates, credit
spreads, volatility, correlations, and from fluctuations in bonds, commodity, or equity
prices. AmBank Group has a comprehensive market risk management policy to support
its trading and balance sheet activities, incorporating an independent risk measurement
approach to quantify the magnitude of market risk within the trading and balance sheet
portfolios.

Figure 3.2: Market Risk

Source: (Market Risk, n.d.).

3.3 Operational Risk

Another example of a decision made under risky condition would be operational risk. It is
the risk of loss resulting from inadequate or failed internal processes, people, and
systems, or external events. It includes legal risk and the risk of reputation loss, damage
arising from inadequate or failed internal processes, people, and systems but excludes
strategic risk. The objective of operational risk management is to ensure that risks are
identified, assessed, measured, monitored, and reported in a structured environment with
appropriate governance oversight.

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 Figure 3.4: Operational Risk Management
Source: (Services, 2017).

3.4 Compliance Risk

Figure 3.6: Compliance Risk

Source: (Wilkinson, 2021).

Compliance risk is the probability and impact of an event that fails to act following laws,
regulations, industry standards, and internal policies that apply to AmBank Group’s
businesses. The Group has a compliance framework that is aligned to key industry
regulatory standards and benchmarks while the framework utilizes the concept of a risk-
based approach to compliance management, which enables the compliance function to
support divisions and businesses in taking a standardized approach in managing
compliance matters.

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4.0 GROUP DECISION-MAKINGMETHODS

Figure 4.1: Techniques Of Group Decision Making

Source: (DECISION MAKING , n.d.).

Group decision-making methods are strategies for structuring group members’

interactions to enhance the quality of a collective decision. It is a set of rules or
procedures that specify the process members should follow when contributing to a
decision of their group. According to Group Decision-Making Techniques (n.d.), the
types of group decision-making methods used by AmBank Group are described as below:

4.1 Brainstorming
Brainstorming is a group decision-making method designed to address issues by
increasing the range of ideas and solutions available for the group to explore.
Brainstorming groups meet specifically to generate alternatives that will later be
considered, discussed, and evaluated when it is time to reach a final decision. The
purpose of brainstorming is to prompt divergent thinking, produce many different ideas
in a short period, and encourage full participation among all group members. It is
designed to minimize stifling ideas by domineering members, interpersonal conflicts,
stereotypes of others’ expertise or intelligence, habitual patterns of silence, and
evaluation apprehension.

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Brainstorming can be implemented in one of several ways. In one version of
brainstorming, group members convene and randomly verbalize their ideas, which are
captured by a tape recorder or a facilitator who writes them on a flip chart. Research has
shown this strategy to be less effective than simply having people generate ideas on their
own, independent of the group. Social anxiety and evaluation apprehension prevent some
members from blurting out their ideas in a group. Additionally, groups experience
production blocking, which is a norm where only one member speaks at a time. During
production blocking, ideas that might have emerged are forgotten or censored while a
member awaits the opportunity to speak.

4.2 Nominal Group Technique

The nominal group technique facilitates both the generation and evaluation of ideas.
Unlike brainstorming, this strategy results in a final group decision. It encourages the
efficient use of time by reducing the propensity for nonproductive digressions, hostile
arguments, balanced participation and sense of accountability,and facilitates idea
generation by reducing production blocking. It discourages domineering or high-status
members from blocking others’, input propensity for social loafing and evaluation
apprehension. Finally, the round-robin listing of ideas prevents groups from prematurely
evaluating solutions before all members have provided input or exhausted their supply of
suggestions.

The nominal group technique typically involves the following steps:

 Write ideas in private

 Take turns reporting ideas
 Discuss ideas
 Vote on ideas
 Calculate the group decision
 Repeat if necessary

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4.3 Delphi Technique
The Delphi technique is a method for collecting, organizing, reviewing, and revising the
opinions of a group of individuals who never actually meet. This procedure, which is
directed by a nonparticipating coordinator, generates a group decision without physically
assembling members. Ideas are solicited and provided via questionnaires. By requiring
members to work independently, the Delphi technique can promote accountability,
decrease social loafing, equalize participation, eliminate the biasing effect of domineering
members, prevent impaired communications stemming from unproductive disagreements
and conflict, avoid the logistical problems (e.g., scheduling) that occur when trying to
assemble a dispersed group, eliminate production blocking, and ensure that a premature
decision is not made before all ideas are expressed. In addition, the anonymity of group
members’ input can decrease evaluation apprehension and minimize pressure to conform.

The Delphi technique typically involves the following steps:

 Solicit input
 Independently generate ideas
 Summarize input
 Distribute summary
 Revise, refine, and prioritize earlier input
 Repeat as necessary
 Form final decision

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5.0 METHODS TO INCREASE EFFECTIVENESS OF DECISION-MAKING
Effective decision-making is an invaluable competency in any work environment. Being
able to make an informed decision can help you become a more productive employee
because it can save you time and help you use resources more effectively. According to
Aaron De Smet, Gregor Jost, Leigh Weiss (2019), several methods to increase
effectiveness of decision-making are described as below:

Figure 5.1: Methods To Increase Effectiveness Of Decision-making

Source: (Aaron De Smet, Gregor Jost, Leigh Weiss, 2019).

5.1 Big-bet Decision

Big-bet decisions require productive interactions and healthy debate that balance inquiry
and advocacy. The presence of high-quality interactions and debate was the factor most
predictive of whether a respondent in our survey also said their company made good, fast
big-bet decisions. Leaders can encourage debate by helping overcome the “conspiracy of
approval” approach to group discussion. Simple behavior changes can help. For instance,
consider starting the decision meeting by reminding participants of the overall
organizational goals the meeting supports, to reframe the subsequent discussions. Then
assign someone to argue the case for, and against, a potential decision or the various
options under consideration. Similarly, ask the leaders of business units, regions, or
functions to examine the decision from outside their point of view. A rotating devil’s
advocate role can bolster critical thinking, while premortem exercises (in which you start

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by assuming the initiative in question turned out to be a failure, and then work back for
likely explanations) can pressure test for weak spots in an argument or plan.

5.2 Cross-cutting Decision

Resolving cross-cutting decisions starts with a commitment to a well-coordinated process
that helps clarify objectives, actions, targets, and roles. Concretely, this may mean
drawing a clear line between the part of a meeting dedicated to the decisions of the
parties of a meeting intended to inform or discuss. Any recurring meetings where the
nature of the decision isn’t clear are ripe for a rethink—and perhaps disposal. Good
meeting discipline is also a must. The new rules also required leaders to clarify their
decision rights in advance and to be more deliberate about managing the number of
participants so that meetings wouldn’t become bloated or lack diverse views. The
manifesto was printed on laminated posters that were put in all meeting rooms, and when
the CEO was seen personally reinforcing the new rules, the news spread quickly that
there was a new game afoot. As the new practices took hold, the benefits became
apparent. In pulse-check surveys conducted for the following year, the company’s
measures of meeting effectiveness and efficiency went up by almost 50 percent.

5.3 Delegated Decision

Delegated decisions are generally far narrower in scope than big-bet decisions or cross-
cutting ones. They are frequent and relatively routine elements of day-to-day
management. But given the multiplier effect, there is a lot of value at stake here, and
when the organization’s approach is flawed it’s costly. Executives who get delegated
decisions right are clear about the boundaries of delegation, ensure that those they entrust
with decision-making authority have the relevant skills and knowledge to act, and
explicitly make people accountable for their areas of decision-making responsibility. This
often means senior leaders engaging in conversations and dialogue, encouraging those
newly empowered to seek help, and in the early days subtly and invisibly monitoring the
performance of those participating in “delegated” forums so as not to appear to be taking
over. Leaders might want to start mentoring their reports with a small “box” of
accountability, slowly expanding it as more junior executives grow in confidence.
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6.0 CONCLUSION
In the nutshell, it is undeniable that decision-making is an everyday task for us. We make
decision making in the environment using three kind conditions in every day of our life,
whether when we should use the car to go work when we buying a new house, make an
investment, expand our business, traveling and more. There is a lot of possibility and
choice that we have to decide on using these three conditions that is certain condition,
uncertain and risky condition. We have to decide using the information and experience
because good decision-making requires not only knowing the facts but also
understanding the limits of knowledge, especially in group decision-making. Thus,
alternatives to increase the effectiveness of decision-making are essential and we should
implement those methods whenever we make decision making.

Total Word Count: 2944 words

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REFERENCES

Aaron De Smet, Gregor Jost, Leigh Weiss. (2019, May 1). Three keys to faster, better
decisions. Retrieved from McKinsey Quarterly:
https://www.mckinsey.com/business-functions/people-and-organizational-
performance/our-insights/three-keys-to-faster-better-decisions

AMBANK. (2012, June 14). Retrieved from Brands Genius:

https://brandsgenius.blogspot.com/2012/06/am-bank.html?view=sidebar

Berhad, A. (. (n.d.). About Us. Retrieved from Ambank Group:

https://www.ambankgroup.com/eng/aboutus/Pages/Introduction.aspx

Credit Risk Management in Banking. (n.d.). Retrieved from LDM Management:

https://lumbmahat.com/credit-risk-management-in-banking/

DECISION MAKING . (n.d.). Retrieved from Slide To Doc:

https://slidetodoc.com/decision-making-contents-introduction-characteristics-
nature-of-decision/

Decision Making Condition & Example. (2016, December 23). Retrieved from
StudyMoose: https://studymoose.com/decision-making-condition-example-essay

Funding and Liquidity Risk. (2019, July 5). Retrieved from Youtube:
https://www.youtube.com/watch?v=QU5V7lI_LRE

Group Decision-Making Techniques. (n.d.). Retrieved from Psychology:

http://psychology.iresearchnet.com/industrial-organizational-psychology/group-
dynamics/group-decision-making-techniques/

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Group, A. (2017). ECONOMIC AND BANKING INDUSTRY REVIEW AND OUTLOOK.
Retrieved from AMMB Holdings Berhad:
https://www.ambankgroup.com/eng/InvestorRelations/AnnualReports/Documents
/2017/6a.pdf

Henry, J. (2018, August 6). 7 Ways to Identify Darknet Cybersecurity Risks. Retrieved
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darknet-cybersecurity-risks/

Market Risk. (n.d.). Retrieved from Market Business News:

https://marketbusinessnews.com/financial-glossary/market-risk/

Services, K. C. (2017, October 17). How can we help you? Retrieved from KPMG:
https://home.kpmg/be/en/home/insights/2017/10/how-can-we-help-you.html

Wicaksana, S. (2013, January 24). Decision making. Retrieved from Scribd Company:
https://www.slideshare.net/wicaksana/decision-making-16151977

Wilkinson, S. (2021, January 26). Compliance and fleet risk management. Retrieved from
Chevin: https://www.chevinfleet.com/en-us/learning-zone/the-importance-of-
compliance-and-risk-management/

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