Businesswww.ukbusiness-today.co.uk • Issue 5 • 2012 • Price £3.50

HEALTHDame Carol Black ongood health in theworkplace

THE ECONOMYEx-BCC president BillMidgley on the AutumnStatement

...with Charlie Mullins,founder of PimilicoPlumbers

THE BT Q&A

BOARDROOM MATTERS

WORKFORCEDEVELOPMENTSPECIAL

• LEADERSHIP• APPRENTICESHIPS• HEALTH AND WELL-BEING• EMPLOYEE PSYCHOLOGY

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Why is it important to understand amanager’s risk profile?

Firstly, and most obviously, it is useful to beable to place managers (and other employees)on the spectrum between ‘over cautious’ and‘gung-ho adventurous’ so that you can evaluatetheir actions and their likely responses in thatlight. In other words, it allows their ownmanagers to manage them appropriately. Theinterpretation of instructions and policies willreflect their appetite for risk.

What are the implications of notunderstanding a manager’s risk profile?

One’s Risk Type is not visible and, in thecompany of their superiors, people willrestrain their behaviour (we all do it) so,typically, we only learn about an employee’spropensity for risk if and when theirreputation catches up with them. Aninstruction or encouragement that doesn’t takeRisk Type into account may tip the responsetoo far, or not far enough.

Do you think the ideas and theoryaround risk profiling have implicationsfor the boardrooms in UK plc generally?

The general rule is that, the higher you get inthe structure of the organisation, the lesslikely you are to feel the need to holdback or to restrain your true nature.This applies to risk taking as well asto other features of personality.The opportunities for risktaking are also greater so, yes,the implications for the boardroom are considerable.

The greatest threat topersonal restrain comes intimes of stress, orintoxicating success. In thefirst instance, stress leadsyou to regress to your moreprimitive self. In terms ofRisk Type, this may meanthat you withdraw andbecome paralysed by inaction,or conversely, that you becomeincreasingly reckless, doubling upon your bets until you’re broke. Inthe second instance, success leads tofeelings of invulnerability and you havetotal belief in your own abilities. We certainly saw some of this in 2008/9 asmajor banks imploded with their top brass intotal denial.

Could you tell us about how your own riskprofiling works? Which types of staff do youwork with and how do you look towardsdeveloping a profile of somebody?

Risk taking is embedded in personality so wedeconstructed personality assessment toidentify all the elements that might haveimplications for risk appetite and reaction tothings going wrong. The result of our researchidentified four clear factors and these becamethe four poles of the Risk-Type Compass. Thefinal version of Risk-Type Compass identifiespeople in one of eight Risk Types – four ‘pure’types (the original poles) and four ‘complextypes’ (people falling at the quarter points)who have a blend of the characteristics of boththe poles on either side.

The Risk-Type Compass is used by financialadvisers to assess their client’s propensity forrisk (an FSA requirement), for personaldevelopment, for coaching of senior staff, forteam building or for part of a selection process.We have researched the Risk-Type Compasswith IT professionals, recruiters, policeofficers and fire-fighters.

Based on these profiles is it fair to say thatsome people simply aren’t fit for seniorroles in organisations?

No. The critical issue concerns self awareness.Organisations require risk takers as much asthey require cautious and wary types. Theproblems arise when you don’t know yourselfwell enough. We have been dealing with thisquestion in relation to auditors; can you justifydeclining applications from Spontaneous,Carefree or Adventurous Types? Again, theissue is whether they are sufficiently self-aware.Within an organisation Risk Type may wellinfluence which desk, which team or whichspecialism you would be best suited for.

What are the implications of the recessionin terms of managers ‘reverting to type’where risk is concerned?

The dangers are probably greatest when peopleact on their instincts rather than using theirheads. Recession and the associated uncertaintyhas a general and pervasive inhibitory influencethat will effect all Risk Types. The tendency isfor people across the board to take less risk –this is what slows commerce down and dries upthe money supply and the wholesale moneymarkets. People tend to act like sheep in thissituation. The records in borrowing that

characterised the boom years reversedalmost overnight to break records inthe repayment of personal andcorporate debt after 2008.

Recovery relies on peoplebeing prepared to take risksagain. The risk takers will bethe first to sense anopportunity and we are allreliant on them to getthings restarted. I expectthe shoots of recovery tocome from the countlesssmall businesses where theentrepreneurial spirit isstrong – typically run bythe Adventurous andIntentional Types. They willspot the opportunities at the

micro level of the economy andmake the most of them.

My advice to government would be toscrap red tape, ease employment

restrictions, incentivise small businessesthrough employment schemes and tax breaks inorder to share the burden of risk that we needthem to take.

A risk worth taking?BUSINESS TODAY talks to Geoff Trickey, whose company the Psychological Consultancy has done some pioneering work in the area of attitude to risk and the implications for training