What risk type are you? Are you a moth to a flame or sure footed? 29/03/2012
Do you know your risk type? How can knowing your risk type help you to avoid conflict, manage risk effectively, nurture your talent and build the right team around you? Geoff Trickey explains. Different risk types
Arguing for the importance of self-awareness, Socrates famously taught that ‘the unexamined life is not worth living’. Arguably, the self-awareness of senior executives and managers determines whether other people’s lives are worth living – and that applies especially to self-awareness about risk type. The distance between an extreme ‘Wary’ risk type and their opposite, the ‘Adventurous’ risk type, in terms of propensity for risk and risk perception makes the proverbial difference between chalk and cheese look like nit picking. While the former recoil from even minor threats and insecurities, the latter will dive headlong into uncertainties of all descriptions in pursuit of excitement and opportunity - not merely subtle differences of outlook then. It is certainly a challenge for either risk type to even imagine the distance between the poles that they are apart. The same could be said for any pair of opposite poles on the risk type compass, an assessment that places people into one of eight risk types.
Failures of self-awareness in corporate risk
In these circumstances, failures of self-awareness and an appreciation of these critical differences in outlook will threaten group equilibrium and the chances of rational debate and effective decision-making. As colleagues with very different risk dispositions increasingly view each other with frustration and disbelief, they are in danger of slipping towards confrontation and belligerence with potentially long-term impact on working relationships and effectiveness. This is not an unlikely scenario - since risk and the interpretation of risk must always be pivotal to business success, effective management and governance issues, risk decisions will inflame passions. In the boardroom, where personalities are likely to be singular and egos robust, it would be surprising if this were not the case. Of course, it is easier to recognise the impact of such dynamics with the benefit of hindsight and especially on someone else’s turf. The graveyard of former greats is littered with examples where the balance of risk went seriously awry; the ENRON and RBS stories have become iconic references in the pantheon of corporate governance and mortality. Eastman Kodak might be a nominee for the opposite pole of corporate risk taking. Home truths will always be more challenging to get to grips with.
Managing risk - striking a balanced view
Disposition towards risk is hard-wired and surely has to be the salient driver of evolutionary success. We are among the survivors of our Pleistocene forbears and should be thankful for the success of previous generations in getting the balance right. Continued success and survival in the corporate world depends on doing more of the same. For group policy development and decision-making this presents some critical challenges. A particular kind of strength is required for