Risk and the Human Factor

 

by Ann Brophy

 

Navigating risk is the art of organisations avoiding or mitigating the things that could go wrong while grasping opportunities that could go right.

Even in this evermore complex and uncertain world, management of risk has focused heavily on the reliance on procedures, regulation and legislation to manage risk appetite and tolerance and to create the environment whereby risk is managed and regulated. This kind of framework can make it appear that things are in hand and they know what’s happening.

Job done?  Well…no, because people are the grit in the risk oyster.

Personality and life experience affect and mould risk appetite, tolerance and behaviour. Where some will challenge others may avoid, where some are calm others are anxious and some see opportunity where others see dread.

The Risk Type Compass® identifies these individual differences to allow Trustees, Directors and Managers to maximise potential and to balance the contributions of both risk-takers and more risk averse individuals; minimising risk whilst maximising opportunity. The Risk Type Compass® assigns people to 1 of 8 distinctive Risk Types.

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This assessment identifies the potential benefits and challenges faced by different Risk Types in different roles. It has a particular relevance to teams where group dynamics and the ‘Risky Shift’ phenomenon can be a threat to controlled decision-making.

A client of ours wanted to examine the impact of new Board appointments on their risk appetite and raise the understanding of how other board members viewed and approached key business objectives to ensure consensus decision making as they faced transformational change.

The Board all completed the Risk Type Compass® assessment and a Board Risk workshop was arranged to discuss the results. The workshop opened up positive discussions around Risk Type variances and how these dispositions influence each board member’s view of business risk.

With the clarification of Risk Type distinctions, including strengths and potential blind spots, a strong consensus began to develop regarding fellow board members and where they each fell on the Risk Type Compass®.  

This helped to highlight how people are influenced by their pre-disposition to risk and improved board member appreciation of other risk dispositions and the potential benefits that may accrue when differences in perception are openly appreciated and embraced.

For more details please contact Bryan McPaul at [email protected]-mcpaul.com