The Risk Type Compass: The key to people-centric decision making
Risk dispositions impact the decision making of individuals, the inter-personal dynamics of teams and the risk culture of organisations. Knowing how each individual perceives and reacts to risk and uncertainty – the way that they deal with the continual flow of conscious and unconscious decisions – provides invaluable insight into the vulnerabilities and effectiveness of decision making at all levels.
An exceptionally reliable psychometric tool, the Risk Type Compass (RTC) supports the cognitive diversity required to maximise effectiveness and avoid ‘group think’, ‘risk polarisation’ and ‘cognitive dissonance‘. The only tool that reveals the critical balance between Cognition and Emotion which, according to neuroscience, characterise decision making, the tool addresses issues at the core of organisational success, ensuring that diversity developments are balanced and sustainable. As cited by Michele Wucker, in ‘You Are What You Risk‘, the RTC is ‘not just used by financial firms but risk – and saftey-concious heavy industries and by corporate boards and other groups looking to improve team dynamics’.
The assessment places individuals into one of eight distinctive Risk Types, is easily administered online and takes just 10-20 minutes to complete.
If you’d like to learn more about the different ways in which the Risk Type Compass can be applied, want to find out about our bespoke in-house training sessions, become certified yourself, or to request a demo, contact our Consultant Psychologist, Chloe Davis.
Applying the tool
Registered and recognised by the British Psychological Society (BPS), and developed by highly experienced Chartered Psychologists, the Risk Type Compass reflects the neuroscience of decision making. It was created through professional practise and action research, allowing the empirical data to drive development, rather than siding with ‘big data’ and ‘dust bowl empiricism’.
If you’d like to administer the Risk Type Compass tool to employees or clients yourself (rather than via our consultancy service), you must first complete a qualification workshop, either face-to-face or via our online learning platform. This certification course will provide extensive information on how to interpret and give feedback on an individual’s risk profile, guidance on facilitating team development sessions as well as an overview of how to apply the tool to support risk culture strategy. Scroll down to learn more about key applications of the tool, or if you would like to become a certified user, visit our training page here.
WEBINAR: What can happen when an Adventurous Risk Type joins a predominantly Wary decision-making team, and then adds an Excitable and Carefree Risk Type to the mix?
Our upcoming Risk Type Compass coffee session, led by PCL’s Chloe Davis and Livia Middleton will provide an interactive forum to explore the use of the tool within teams, and provide an overview of the development conversations that can follow.
When? Feb 1st, 3-4pm GMT. RSVP for the Zoom link to join!
Client scenarios of people-centric decision making
1. The RTC helped to identify the decision-making style of board members and to assess risk culture. The assessment found all members gravitated towards the same Risk Type. It was clear that their strengths included being calm, level headed and stress tolerant. During the subsequent workshop, it became clear that there were potential blind-spots in their approach to decision making, such as lacking urgency in implementation and not learning from past mistakes.
2. The RTC was adopted to highlight the strength areas and risk appetite associated with the Risk Type of individual traders. Also, to identify blind-spots, potential performance improvements and the style of trading they were most suited for. The RTC is used extensively in trader coaching in financial centres around the world.
3. The tool has also been used to anticipate sticking points that may arise during organisational change. This enabled leadership to rethink risk in terms of objectively measurable differences, which resulted in increased interpersonal-awareness and mutual respect of Risk Type variations. This open communication channel supported team operations and decision making, championing the realisation of talent, personal responsibility and human capital.
4. A major European subsidiary of a US mining organisation was under pressure to improve its safety record. In pursuit of this aim, their goal was to enhance employees’ self-awareness about the impact of their personalities and risk attitudes on their work performance. Compliance requirements can present very different challenges to different people, depending on their natural risk dispositions. PCL’s ability to differentiate people according to their Risk Type makes it possible to define ‘tailored’ personalised agendas for risk awareness training.
If you’d like to speak to our Risk Type Compass Consultant Psychologist about how you can support people-centric decision making in your workplace, please get in touch.
Health & Safety
By acknowledging personal responsibility and natural risk behaviours, it is possible to move away from a ‘one size fits all’ risk management process while, at the same time, ensuring that safety behaviours meet the necessary H&S requirements in the future – learn more via SHP online and IOSH.
As individuals, our risk personalities are very different – much more so than is generally appreciated. Booked last minute on a Friday lunchtime, Eli has just returned from a weekend break in Prague. Tom, on the other hand, is still meticulously planning his mini-break in Copenhagen, for 2023! This is cognitive diversity in action – decision making in the spotlight. Why is a focus on people-centric decision making so relevant to the workplace?
The extreme differences in Tom and Eli’s approach to decision making are illustrative of a range of distinctive differences in ‘cognitive style’ that characterise each of us in one way or another. These undercurrents of decision making, at play in any informal social gathering, add to the interest, variety, and liveliness of the occasion. However, in critical decision making moments, these same undercurrents can have serious, even alarming, implications. We all deal with decision making in our own individual ways – whether socially, domestically or in the workplace – and decision making shapes the future; the successes and the failures of any organisation.
Broadly, the population is split equally between risk-taking and risk-aversion, but this diversity is more usefully divided into eight distinctive Risk Types. What happens if a team or board is predominantly risk-taking with an adventurous approach to decision making, such as Eli’s? Or missing opportunities due to their fear of taking uncalculated risks, such as Tom? On the other hand, if all members of the team (or the board) approach risk and decision making in the same way, this like-mindedness may feel comfortable but is a recipe for ‘groupthink’.
Looking at the ‘human factor’ or the people side of risk management, the Risk Type Compass helps organisations to attain their risk management goals. It significantly improves human factor due diligence and risk management effectiveness by raising awareness of an individual’s predisposition to risk and how that may manifest in a team.
The Risk Type Compass can be used to develop teams, groups and executive boards. By assessing different team members Risk Type and attitude, imbalances or the potential for conflict can be identified and mitigated, ensuring a balance of behaviours across the organisation. See sample Team Report.
Selection & Development
Risk Type has implications for different roles within an organisation, with sales, compliance, traders and HR, for example, all exposed to very different aspects of risk. From hiring the right person, to on-the-job coaching and personal development, the Risk Type Compass helps you understand an individual’s risk attitude and helps inform decisions at an individual, team and corporate level. See sample Risk Type Report and Personal Report.
The Risk Type Compass tool can support compliance with the Financial Reporting Council’s UK Corporate Governance Code when board members are assessing the level of risk the organisation is facing from internal, emerging and principal sources.
Risk Type Landscape
By mapping the location and prevalence of Risk Types within an organisation, Risk Type Compass enables risk propensity to be identified and managed. Viewing the Risk Type Landscape in a tangible way allows organisations to make people-centric decisions about the overall risk culture and the extent to which there are departmental or divisional differences.