bp june 2013
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Grace Walsh Psychological Consultancy Ltd.
Risk and Decision Making"
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Grace Walsh Psychological Consultancy Ltd.
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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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
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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
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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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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
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Grace Walsh Psychological Consultancy Ltd.
Eight Risk Types
• SPONTANEOUS Uninhibited, excitable, unpredictable and distraught when things go wrong.
• INTENSE Enthusiastic and committed, but pessimistic and easily defeated by set-backs.
• WARY Well organised but, anxious and fearful of failure they passionately seek to control.
• PRUDENT Cautious, self-controlled and most comfortable with continuity and familiarity.
• DELIBERATE Imperturbable, confident and systematic they are fearless and well prepared.
• COMPOSED Calm, cool headed and optimistic they seeming oblivious to risk.
• ADVENTUROUS Calm and unemotional but impulsive, daring and up for any challenge.
• CAREFREE Unconventional and excitement seeking, their imprudence makes life exciting.
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Grace Walsh Psychological Consultancy Ltd.
Prevalence of Risk Types: General Population
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Grace Walsh Psychological Consultancy Ltd.
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)
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Grace Walsh Psychological Consultancy Ltd.
Type & Attitude
RISK TYPE
RISK ATTITUDE
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Grace Walsh Psychological Consultancy Ltd.
Risk Tolerance Index (RTi)
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Grace Walsh Psychological Consultancy Ltd.
Risk-Type Compass® Model • Measure of Personality – Risk Type • Measure of Attitude – Risk Attitude • Measure of Tolerance – Risk Tolerance
Index
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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)
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Grace Walsh Psychological Consultancy Ltd.
AUDITORS
RECRUITERS
ENGINEERS
IT PROFESSIONALS
Differentiation
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Grace Walsh Psychological Consultancy Ltd.
Gender Differences
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Wary Prudent Deliberate Composed Adventurous Carefree Spontaneous Intense
Percen
tage of sam
ple
Risk Type
Risk Types of males and females Males n=843, Females n=656
Male
Female
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Grace Walsh Psychological Consultancy Ltd.
Applications of the "Risk Type Compass®
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Grace Walsh Psychological Consultancy Ltd.
Uses of the Risk Type Compass®
• 3 Broad Areas of Application:
– Individual
– Team
– Organisational
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Grace Walsh Psychological Consultancy Ltd.
Discipline & Personal Responsibility (DPR) Workshops
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Grace Walsh Psychological Consultancy Ltd.
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
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Grace Walsh Psychological Consultancy Ltd.
RTC Team Workshop • Objective 1 – Personal responsibility – What can I do?
• Objective 2 – Team responsibility – What can we do?
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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
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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
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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
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Grace Walsh Psychological Consultancy Ltd.
Validity Studies • Risk and Security (Gordon, 2010)
Need for Security negatively associated with Risk Tolerance Index
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Grace Walsh Psychological Consultancy Ltd.
THE END
Tel: +44 (0) 1892 559540 Email: grace@psychological-
consultancy.com