I've dealt with a lot of spooky dressage horses, and I find that often shying gets worse because riders do one or all of the following things.

1. Hit or kick him to make him obedient.
2. Make him walk straight up to scary object and face it straight on.
3. Forget to go around your ring in both directions.
4. Force him to go close to the scary object.
5. Patting and soothing him while he’s shying.

Let's understand the nature of horses:

1. Horses shy because they're afraid.
2. A horse shies because his natural instinct is to keep himself safe by fleeing.
3. His eyes are set on the side of his head so he can see with binocular vision (like us) as well as monocular vision.
4. Many horses are claustrophobic.

So looking back at the first list of rider coping strategies, you can probably see why they don't work very well.

1. If your horse is afraid, punishing him convinces him there is something to be afraid of.
2. Asking your dressage horse to walk straight up to a scary object is one of the most frightening things you can do. In his mind, it’s like asking him to meet a cougar head on.
3. Like people, horses have a dominant eye. When the dominant eye is on the outside, your horse is less apt to spook because he can survey the environment for possible danger. When the dominant eye is on the inside, he’s more anxious. He’ll want to whip his head around and check out his surroundings with his dominant eye. And while he’s doing that, he’ll be shying from potential danger.
4. If you try to go by the scary object as close as possible your first time around the ring, you’ll add to your horse’s anxiety.
5. If you pat him, you’re rewarding him for being spooky. In his mind, you’re praising him for keeping you safe, and he’s more apt to repeat the behavior.

Taking all of the above into consideration, here's what I do:

1. I never punish a horse that shies.
2. I don’t reward the horse while he's shying.
3. I walk around a new environment (ring, field, arena) in both directions so he can see everything slowly the first time with both eyes.
4. If the scary object is at A (a flower pot, for example), I won’t go all the way to the short side my first time around the arena. I might turn across the school between V and P. Then each time around I get gradually closer to the short side so when I finally go by the flowers, it’s no big deal.
5. Once I’m working I add the following 2 tools. Well before the flowerpot, I bend my horse’s neck so much to the inside so he can’t see it with either eye.
6. When I'm beside the flower pot, I soften my inside hand forward so my claustrophobic dressage horse doesn't feel pinned against whatever he’s afraid of.

A Happy Horse