Risk & Decision Making

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

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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 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

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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 Enthusiastic and committed, but pessimistic and easily defeated by set-backs.

•

COMPOSED 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

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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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Spheres Of Application • • • • •

Project Management Risk Management Compliance Health and Safety Talent Management

• • • • •

Coaching Accreditation Financial Planning Team Building Risk Culture projects

Where risk awareness is important Grace Walsh Psychological Consultancy Ltd.

Uses of the Risk Type

® Compass

• 3 Broad Areas of Application: – Individual – Team – Organisational

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Individual Level Application " • Know your own Risk Type • Appreciate it’s benefits and limitations • Manage your Risk Type impact • Realise just how different people can be • Appreciate ‘the risk of the risk manager’

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Group/Team Level Application" • Understand possible implication of team dynamics – is it the right balance?

• Convergence, divergence, influence & centre of gravity

• Assess strengths and weaknesses • Inferences on communication, social dynamics & ‘risk polarisation’ on decision-making • Relevance to engagement & co-operation – Risk Type of others • Self-awareness and awareness of others – Increased cohesion and effectiveness Grace Walsh Psychological Consultancy Ltd.

Group Report

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Discipline & Personal Responsibility (DPR) Group 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 group/team 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.

Implications for Organisations Risk Type influences: • Risk Culture: the prevalence of Risk Type – Total organisational analysis – “The people make the place” Schneider (1987) – theory of culture

• Risk Landscape – Departmental analysis – Highlight similarities and differences across divisions and departments – Consider risk approach in line with corporate strategy Grace Walsh Psychological Consultancy Ltd.

Organisational Level Applications • View the risk landscape in a tangible way – identifying ‘hot’ or ‘cold’ spots

• Zoom in on departments/teams; identify the balance in risk taking styles • Coordinate talent management; recruitment, redeployment, development, succession planning • Link survey data to performance observations • Pulled data through to generate Group Reports • Inform strategic planning and risk policy development Grace Walsh Psychological Consultancy Ltd.

Company Risk Landscape

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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.

THE END Tel: +44 (0) 1892 559540 Email: grace@psychologicalconsultancy.com

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