Risk and Decision Making"
Grace Walsh Psychological Consultancy Ltd. Â
Recent presentations and publications • Association of Project Management –‘Resilience’, Sept 2012 • Institute of Risk Management – ‘Risk Culture’ Paper, Nov 2012 • European Risk Zone Conference – Vienna, Sept 2012 • Project Zone Conference – Frankfurt, March 2013 • DOP - 'Risk Type - The importance of Personality in Assessing Risk Tolerance’, May 2012
• The Control Risk Self Assessment – ‘Risk Culture’, Sept 2012 • Association of Business Psychology – ‘Risk Type and Decision Making’, Oct 2013
Grace Walsh Psychological Consultancy Ltd.
Introduction • Areas of risk and H&S – focus has been on regulation and legislation - individual differences neglected – People can be the most significant risk factor – Employee’s assets and limitations – informs training and development
• Individual differences often ignored as part of a risk/H&S programme – but have important workplace implications – There are people in the boxes!
• Research shows – people differ in their approach to risk. Individual risk appetite will influence decision-making and behaviour – Need risk takers and risk averse Grace Walsh Psychological Consultancy Ltd.
The Importance of Personality • A number of personality attributes contribute to employee safety (Costa & McCrae, 1987; Cellar, Nelson, York &Bauer, 2001; Conte & Jacobs, 2003; Salgado, 2002) • Our innate level of anxiety – our need for predictability, as well as our impulsivity and need for excitement • These deeply rooted ‘tendencies’ determine our appetite for risk - the foundations for Risk Type
• Personalities can be strengths or weaknesses depending on the demands of the task • We learn to deal with risk and manage our tendencies • However stress or the intoxication of success can trigger a reversion to our true Risk Type Grace Walsh Psychological Consultancy Ltd.
The Risk-Type
® Compass
• Personality based assessment • Based on globally validated research on the FFM • Based on a robust and consensual core of global psychological research • Implications for risk management and decision making: – – – –
Risk perception Decision-making Resilience Communication
Grace Walsh Psychological Consultancy Ltd.
The Risk-Type
® Compass • Eight Risk Types • Continuous spectrum – Adjacent Risk Types similar – Facing Risk Types opposites
• Markers (•) for extreme types are placed at the outer edge, moderate types near the centre • Central 10% Typical Grace Walsh Psychological Consultancy Ltd.
Eight Risk Types •
SPONTANEOUS Uninhibited, excitable, unpredictable and distraught when things go wrong.
•
DELIBERATE Imperturbable, confident and systematic they are fearless and well prepared.
•
INTENSE
•
COMPOSED
Enthusiastic and committed, but pessimistic and easily defeated by set-backs.
Calm, cool headed and optimistic they seeming oblivious to risk.
•
WARY Well organised but, anxious and fearful of failure they passionately seek to control.
•
ADVENTUROUS Calm and unemotional but impulsive, daring and up for any challenge.
•
PRUDENT Cautious, self-controlled and most comfortable with continuity and familiarity.
•
CAREFREE Unconventional and excitement seeking, their imprudence makes life exciting.
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Prevalence of Risk Types: General Population
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Risk Attitude –variable • R-TC recognises the significance of risk attitudes • Influenced by experience, training, current climate or personal circumstances • Focuses on five key domains addressed by research – Financial, health & safety, recreational, ethical and social (Weber et al., 2002; Blais and Weber, 2006) Grace Walsh Psychological Consultancy Ltd.
Type & Attitude
RISK ATTITUDE
RISK TYPE
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Risk Tolerance Index (RTi)
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Risk-Type
® Compass
Model
• Measure of Personality – Risk Type • Measure of Attitude – Risk Attitude • Measure of Tolerance – Risk Tolerance Index
Grace Walsh Psychological Consultancy Ltd.
Report Structure • Assigns individuals to their appropriate Risk Type • Considers Risk Attitude across five key domains • Calculates the individual’s Risk Tolerance Index (RTi)
Grace Walsh Psychological Consultancy Ltd.
Differentiation IT PROFESSIONALS
ENGINEERS
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RECRUITERS
AUDITORS
Gender Differences Risk Types of males and females Males n=843, Females n=656
20 18
Percentage of sample
16 14 12 10
Male
8
Female
6 4 2 0 Wary
Prudent
Deliberate
Composed Adventurous Risk Type
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Carefree
Spontaneous
Intense
Applications of the " Risk Type Compass®
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Uses of the Risk Type
® Compass
• 3 Broad Areas of Application: – Individual – Team – Organisational
Grace Walsh Psychological Consultancy Ltd.
Discipline & Personal Responsibility (DPR) Workshops
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Development Workshop Aims • Understand individual risk propensity: • Own profile; strengths and limitations • Other’s profiles and appreciating other contributions – risk takers and risk averse • No bad or good profiles - just different
• Understand management/dept risk appetite & dynamics? • • • • •
Open up communication lines Reduce resistance and increase motivation Enhance working relationships Strengths, limitations – innovation and cautious exactness Informs corporate risk strategy and talent management
• Personal responsibility for team effectiveness – ACOUNTABILITY Grace Walsh Psychological Consultancy Ltd.
RTC Team Workshop • Objective 1 – Personal responsibility – What can I do?
• Objective 2 – Team responsibility – What can we do?
Grace Walsh Psychological Consultancy Ltd.
BUSINESS BENEFITS" • Enhance individual/team effectiveness – appreciate risk type and influence on risk perception, risk tolerance & decision-making • Produce better results and more efficient processes in risk and H&S - welcome diversity and strengthen communication • Promote accountability and responsibility when it comes to risk management and H&S – individual, team and wider organisation • Change mind sets – not all risk is bad – risk, creativity and competitive advantage • Inform risk management strategy – tangible measure of human factor risk and its impact on the overall risk equation • Inform talent management – selection, development and training Grace Walsh Psychological Consultancy Ltd.
Positive Risk Management • The world needs risk takers: • Entrepreneurs • Creativity • Sales people • Heroes • Challengers of the status quo • Enron vs Kodak – two ways to fail • Risk Culture & Friendly Fire • Not about avoiding risk – it’s about managing risk • Managing risk against opportunity Grace Walsh Psychological Consultancy Ltd.
Validity Studies • Risk and Creativity (Cichomska, 2010)
Used the Creative Personality Scale (Gough, 1979) Positive correlation between creativity and risk tolerance Grace Walsh Psychological Consultancy Ltd.
Validity Studies • Risk and Security (Gordon, 2010)
Need for Security negatively associated with Risk Tolerance Index
Grace Walsh Psychological Consultancy Ltd.
THE END Tel: +44 (0) 1892 559540 Email: grace@psychologicalconsultancy.com
Grace Walsh Psychological Consultancy Ltd. Â