All posts by Erin

Mindfulness and Risk

In an era of great change, how might organisations make the most of a rare opportunity to enhance human capital?

With the easing of restrictions and the transition from the emergency phase of the pandemic, organisations are beginning to settle into their ‘new normal’. Following over two years of disruption, many organisations will look different – whether because footprints have grown or contracted, business models have changed, IT capabilities have improved, or staff roles expanded. In this context, Geoff Trickey, consultant psychologist at the Psychological Consultancy, believes that organisations have a golden opportunity to enhance human capital by better understanding attitudes towards risk. This is supported by the worrying economic and geopolitical backdrop, where human resilience continues to be tested – making the case for the importance of risk-aware teams.

Deborah Ritchie speaks to Geoff Trickey about the increasing value of risk awareness.
You can read the full interview here.

Recruiting into Senior Leadership Teams: Why Should We Consider Cognitive Diversity?

The decision-making styles of senior leadership shape the culture and preferred business models of any organisation.
Take Rohan and Susan for example, who both hold a senior role within a construction firm.
Rohan has a wary approach to risk and decision making whereas Susan has an adventurous approach.

Explore what this means for them in their role in the below article:

Recruiting into Senior Leadership Teams: Why Should We Consider Cognitive Diversity?

An Innovative Approach to Risk Mangement : Hearts & Minds

Risk management has traditionally tended to focus almost entirely on the risk per se – its probability, management and prevention. This may sound eminently sensible, but in fact the risk, hazard or anticipated threat is really only one half of the equation. Risk-aware decision-making also involves considering the perpetrators, the vulnerable, the operatives, the victims and, of course, the risk managers themselves. It is, in other words, primarily a ‘people’ thing.

An innovative approach to risk management that takes personality traits into account has recently emerged, and Geoff took a deeper look in the below IOSH Magazine article…

https://www.ioshmagazine.com/2022/03/02/risk-management-winning-hearts-and-minds

How much risk is your client willing to take?

Risk is in attendance at every decision we make, yet questions like ‘how much risk are you willing to take?’ prove very difficult for most people to answer.

At the very extremes of risk taking and risk aversion this distinction may be a bit clearer – but then, few people fall at the extremes of a distribution.

Nevertheless, this is the kind of question that financial advisers need answers to. Regulators around the world require that a client’s risk appetite should be taken into consideration when recommending products that they deem appropriate.

Personality psychology highlights extreme variation in people’s propensity for risk taking.

Learn more about how to manage risk in the financial sector here via the FT Times

What is social capital, and how can we maintain it if we are working from home?

During the pandemic, we learned what it is like to see our domestic and work routines transformed. The interlocking timetables of family life and virtual teams and offices that had been waiting in the wings until they became essential for survival.

Initially, when we saw the loss of personal workplace relationships as temporary, it may have seemed an acceptable sacrifice. However, according to a Gallup study, colleague relationships contribute to self-esteem and the feeling that you’re achieving your full potential.

So how can we maintain this social capital whilst working from home?
Read the full article via the Actuary here to read more

What Breeds Confidence?

Confidence is a very reassuring characteristic. Whether seeking advice or looking for leadership, we appreciate a response that is unequivocal and decisive. At times of uncertainty and anxiety, we look for someone who, at least in appearance, has a confident and optimistic view about what we should do. When the plane is being buffeted by turbulence on your holiday flight, chances are that you will keep an eye on the cabin crew; are they remaining relaxed, smiling and optimistic? A confident demeanour is always reassuring.

Psychological Consultancy Ltd (PCL) has been conducting research into personality for two decades. In its research publication, ‘Made to Measure’, PCL reflects the view that personality assessment is capable of very accurate descriptions of individuals and ‘confidence’ is a significant part of that picture. The appeal of confidence arises because, in personality terms, it is typically accompanied by optimism and calmness. Some people just seem to have it. For others it can seem a battle that is rarely won.

Self-confidence is one of those competencies often cited in job descriptions and elaborated as being socially self-assured, ready to express opinions and happy to take on responsibilities. However, our ‘Made to Measure’ research shows that self-confidence is one of the personality traits that can be hard to find. This is reflected by the choice of over 14,000 Amazon book titles on the subject – everything from self-help promises of improved self-esteem to success in public speaking, power and influence.

Confidence comes in different guises and its not all good news.

Some have the innate personality characteristics that support this behaviour. Calm babies, by and large, become calm and confident adults. At their best, these people are emotionally imperturbable and unreactive, so they weather any storm and keep their heads when others may be in a state of panic. On the down side they may seem insensitive to the needs of the more tortured soles that surround them – they never seem to quite understand what all the fuss is about. People like working with them because they are reliably consistent and predictable in their mood. Individuals know where they stand with them, and they seem even handed and fair because their demeanor is the same with everybody. Depending on other aspects of their personality, these characteristics are often viewed as fearlessness (unperturbed by risk) or insensitivity (showing little emotion).

A second group at this extreme end of the spectrum is also populated by those who’s confidence is fueled by a deeply rooted assertiveness and egotism. In a work situation they have a need to ‘trump’ others in any conversation in terms of their experiences and achievements and to assert their opinions and authority. This apparent abundance of confidence is likely to be rewarded by career progress. As managers they are likely to impress their superiors but their subordinates may regard them as arrogant, manipulative, blaming others and taking all the credit.

The third, broadest and largest category by far includes those who become confident through experience. People who are not naturally sure of themselves, even some who are low in self esteem, may become very confident because of their mastery in their own field. Such people often master the art of public speaking even though this is the top source of anxiety for most people. Becoming knowledgeable in a specialist area or skilled in some way contributes to self-esteem and success breads confidence (as any sports team knows). However, this kind of confidence is selective. Although there may be a general rise in self-esteem, the peak of confidence will remain in the domain where it was earned. The most confident and decisive may revert to being hesitant and unsure in less familiar territory outside their ‘comfort zone’.

These personality descriptions have implicit long-term predictive value. As we settle into our various roles, people are increasingly likely to display the dispositions captured by a personality assessment. By now, you will have some idea where you fall in this spectrum of confidence. So what, if anything, can you do if you want to change things? Whatever our personality characteristics, we are all able to control or manage our behaviour to some extent. We do this when we vary our behaviour to suit the circumstances – being very controlled at a job interview, or being wild at a stag party or hen night. Depending on our motivation (our interest, determination or experience), we can perform above or below our natural or most typical level.

Over many years of professional practice, the PCL team has identified four key strategies for personal development. These are not mutually exclusive and any development programme will embrace one or more of the following:

Strategy 1 – Build on your strengths
The easiest way to make a difference is to focus on the approaches and methods that you are already good at. These will, almost by definition, be strategies that you have a natural potential for. The question is, “do you know what your strengths are?” Surprisingly, people often don’t. When something comes very naturally to you and requires little effort, there is a tendency to under value it’ to assume that it is ‘normal’ for everyone and unexceptional. Some people have a ‘natural’ potential for spelling. You may have met people who seem able to spell everything, and with little effort (even exhilarate, acrylic and diarrhoea)! Others can sing, write well or are artistic, yet never exploit these talents.

Strategy 2 – Push the Boundaries
Strategy Two then, is to raise our game, to use feedback or assessment results to build self-awareness and to focus on improvement. Although you won’t change your basic nature, you may be able to improve within the specific conditions of your work. For example, a shy, quiet person cannot be turned into an extravert, but they can learn how to deal with the specific social requirements of their role very effectively – even exceptionally well. Familiarity with the role, its specific focus, knowledge base and routines all help to create a ‘comfort zone’.

Strategy 3 – Compensate and work around
Strategy Three is concerned with developing “work arounds”; techniques or arrangements that compensate for the part of your make-up that is difficult or impossible to change significantly, or enough to make a sufficient performance difference. Again, the first step is self-awareness. You cannot change unless you recognise the need to change and personality assessment will help you to appreciate where your talents lie and where your temperament will be at odds with the demands of your role. Strategies will usually involve approaching the job in a different way, or working with colleagues in a different way, or changing the balance within a role so that you are playing to your strengths. You may do more of this, but less of that, and achieve your targets in that way. Or, you may exploit related aspects of a role to minimise dependency on the characteristics that you are having difficulty in developing.

Strategy 4 – Reign in the excesses
Strategy Four is concerned with the tendency to ‘over play’ ones strengths; or ones perceived strengths; recycling the strategies that have worked for you in the past in the expectation that success will follow as it did before. Just as we may take the most effective aspects of our personality for granted, we also tend to be deaf to criticisms about our less effective characteristics. In fact, people are often quite indulgent of the features that are a turn-off to others. Some psychologists have suggested that parenting may have played a part in this, indulging, encouraging and rewarding behaviours that are ‘cute’ in children but monstrous in adults!

Of course, in practice, all of these strategies will complement and reinforce each other in promoting the desired goals. There is no quick fix for developing self-confidence; it requires commitment to self improvement and a sustained effort. The benefit of psychometric assessment is that we can identify for ourselves our key personality characteristics. Knowing who we are is the first step in understanding how to find a particular role or a career that draws on our strengths and supports and brings out what we are naturally good at. Equally, we can identify the challenges; addressing those elements of our personality that might be holding us back.

You are who you are in the sense that you have a unique combination of natural dispositions. On the other hand, you are also a free agent, a sentient being with free will. How you play the hand that you were dealt with is up to you – it will also write your autobiography.

Geoff Trickey, Managing Director, Psychological Consultancy Ltd (PCL)

Fist Publication: Fresh Business Thinking 2015

Risk Psychology in Projects Podcast

Risk Psychology:
Understanding Risk Personality Types and their implications for project decisions

 

 

Conventional project risk management has focused primarily on the nature of the risk itself and the methods to quantify and manage risks. The critical importance of the human nature of risk has been vastly overlooked. Understanding individual differences in people’s perception and response to risk provides project managers with valuable insight into how and why decisions are made.

In this interview, Geoff Trickey offers a framework for understanding Risk Personality Types that is based on well-established psychological research into personality, attitudes and risk tolerance. The framework places individuals into one of eight easy to understand personality types, ranging in levels of risk tolerance and each associated with different personality characteristics. These characteristics have a fundamental influence on the way an individual is likely to perceive and handle risk.

First published on http://www.guerrillaprojectmanagement.com (2013)

Personality & Risk Podcast

In 2019, Geoff Trickey sat down with Richard Chataway from the Association of Business Psychology to discuss the benefits of identifying and categorising people into Risk Types.

Could uncovering your staff’s risk type could help you to understand how each individual employee perceives, reacts and manages themselves in risky situations? And could this knowledge help employers predict how their staff make decisions? What does that mean for teams? Geoff Trickey, CEO of Psychological Consultancy Ltd, talks about the ‘risk-type compass’ that he developed.

First published on the ABP website.

Different Dispositions

Subjective risk is often overlooked by risk managers as being too difficult to deal with. Yet having a diversity of risk dispositions on a team can be a great strength.

Financial professionals know a great deal about risk. The risk they know about is numerical, statistical, probabilistic and based on precedent and economic history. This is the world of economists, actuaries, underwriters, financial intermediaries and many risk managers. This analytic view of risk is designed to improve financial prediction and decision-making. It might be referred to as objective risk – although, at every point, professional judgment is a necessary component. Subjective risk, on the other hand, is something that financial professionals do not specialise in and often know very little about. Rather than focusing on the dangers and uncertainties that may upset our plans in the outside world, subjective risk focuses on individuals and how they are wired. It is about individual risk dispositions: the personal and intimate experience of risk; the way that an individual reacts; their feelings and emotions; and their resilience, expectations and the way personal perceptions of risk are calibrated. How do these dispositions influence interpretations of events? How do they impact on the thousands of decisions a person makes every day at different levels of consciousness? From a risk manager’s viewpoint, subjective risk is often discounted as a source of error, irrationality, misunderstanding or bias. The distinction between subjective and objective risk is illustrated when someone discounts a debilitating fear of flying (subjective risk) because the chances of being killed are a mere 10,000,000:1 (objective risk). But subjective risk is of considerable material importance. It is what drives all the decisions and often erratic behaviours that create the events and statistics from which objective risk is retrospectively calculated. Risk managers could learn important lessons by focusing on this often-neglected perspective.

Regulation vs organisational development

The two main options on the table to address the failure of financial institutions focus on regulation and organisational development. In a short history of financial euphoria, the late, renowned economist Ken Galbraith argued that “mass insanity” has repeatedly gripped the financial world over the centuries. As waves of euphoria surge through the sector, sober judgment and restraint are swept away, all contrarian views are derided and groupthink rules. Galbraith’s view of the cyclical pattern of failure in the world of finance is mirrored in alternating demands for heavy-touch regulation (to get things back on the rails) and light-touch regulation (to free up entrepreneurial spirit). Whether financial regulation has or has not ever been a success is still argued by economists of different persuasions. The framework for regulation and constraint may have provided a basis for periods of relative calm, but the financial world is in continuous flux, and the results seem never to have provided sufficient defences to stave off the next crisis. The alternative to externally imposed constraint is some form of internal development designed to improve the performance of the industry’s professionals. The array of such corrective offerings made available by major consultancies have not escaped criticism. “It is clear that banks are wasting their money on ‘solutioneering’ or expensive unproven programmes peddled by consultants to address risk culture,” Associate Professor Alessandra Capezio of the Australian National University has recently written. Culture change has been reified within the financial sector as the essential focus for change. But culture is an elusive and intangible concept. Unless it can be defined operationally, this is just kicking the issue into the long grass. Culture is a consequence of the traditions, processes and behaviours of those employed and, as an end product of a process, it cannot tangibly be altered except through the people of which it is composed. Organisational customs and practices are influenced by the attraction and selection of the people it requires to do the job. Successive waves of people passing through leave their mark in terms of their dispositions, habits and mores. In Benjamin Schneider’s influential and pragmatic view on organisational culture, it is the people that make the place. On this basis, if you want to influence organisational culture, then the current employees are the obvious levers of change. The practical reality is that the kinds of change envisaged as a response to financial sector problems need to dig deep. This is not a matter of tinkering at the edges. Broad generalisations about culture have to be realised through changes at the granular level – the level of the individual. To achieve this, it is essential to appreciate the realities of human nature and deal with them. The concept of “depth of intervention”, outlined by TG Cummings and CG Worley in 2009, recognises that management of change requires a consideration of the psychological makeup and personality of employees and the challenges that the proposed change would involve for them. This is the territory of subjective risk – the kind of risk less familiar to financial professionals.

Emotion and cognition

Trends in current neuroscience recognise that two separate neurological systems are involved in any decision-making process – one is concerned with emotion and the other with cognition. For example, the neuroscientist Antonio Damasio says that interactions between these systems create the structures for a wide spectrum of individual differences that are expressed in personality and in risk-related behaviour. Decision-making at a deep level is, therefore, tied to emotional, subjective influences. Cognition concerns our ‘need to know’, to make sense of events and of life. This is a rigid priority for some, but the loosest of frameworks for others. The former are troubled by uncertainty and welcome rules and structure. The latter are curious and embrace new opportunities and new ways of doing things. Emotion is about strength of feelings. Some are anxious and easily unnerved. Their hair-triggered vigilance makes them the natural alarm raisers of our species. Those at the other extreme remain calm and composed in situations that would terrify others; they are the last to run for cover. The majority of people fall somewhere between these four extremes, which also provide the basis for a compass-style model of risk dispositions. Interaction between emotion and cognition creates a rich variety of dispositions that are mapped throughout the 360º spectrum of a Risk Type Compass® – shown here, for example, on a spectrum segmented into eight distinctive Risk Types. Risk Types provide a systematic taxonomy supporting the quantification of human factor risk and differentiating individuals according to the ways that they deal with risk and are disposed to make decisions.

Challenges

More than a million people are employed within the UK financial sector, and every one of them brings their risk dispositions into work with them every day. Teams and working groups will vary considerably because in the population as a whole the eight Risk Types are evenly distributed. These core personality dispositions change very little over a working lifetime, and they have a persistent influence on decision-making. There are no right or wrong Risk Types, but to harness these diverse talents, they need to be recognised and addressed. The changes required in the financial sector are not going to be dealt with by exhortation to do better, by running courses or by campaigns, slogans or optimistic annual report statements. The known challenges to stability and clear thinking are herd behaviour, groupthink, risk-polarisation and cognitive dissonance, factors on which Risk Type can wield significant influence.

The approach

Ensuring that there is diversity in risk dispositions around the table acts as an antidote to groupthink. It allows issues to be considered from several perspectives and encourages the expression of contrarian viewpoints. This may sound adversarial, but in team sports there are defenders and attackers on the same team chasing the same goals. The defenders are alert to danger, the strikers alert to opportunity – so as long as the aims and allegiances are aligned, diversity of risk dispositions makes the team stronger and more effective. This may be less comfortable than a cosy consensus among like-minded colleagues, but it is likely to be a safer bet. Every Risk Type has its contribution to make. The ability to utilise these insights and to bring them to fruition benefits everybody. Individuals then have a well-defined foundation on which to develop risk-awareness and personal responsibility. At the group level, appreciation of the balance or distinctiveness of the group and its dynamics highlight potential blind spots and biases and increases team effectiveness. At an organisational level, the risk landscape highlights the relative risk dispositions of teams, divisions and departments and allows cross-department comparisons, strategic planning, decisions based on team audits, staff redeployment and rebalancing. The aim of organisational change cannot be to alter people’s deeper nature. A better and more realisable objective is to recognise this reality, to address it and to turn it to advantage. Each Risk Type makes its own distinctive contribution to survival. The aim now is no different than it has always been – to maintain that crucial balance between risk and opportunity, to succeed and to survive. As this article has argued, within the totality of risk there is a crucial distinction to be made between objective and subjective risk. The financial world is well-versed in the former, but not in the latter. Banking crises arise, firstly, because financial markets are inherently volatile and unpredictable (matters of objective risk), and secondly because judgment and decision-making are susceptible to the risk dispositions of individuals throughout the organisation (matters of subjective risk). The possibility of identifying and reliably measuring the distinctive risk dispositions of any individual contributes to a potent conceptual framework within which to manage human factor risk. This is a vehicle of proven effectiveness in the development of individuals, the audit and development of teams and a reliable, pragmatic and objective basis for risk culture analysis. The Risk Type Compass® provides a taxonomy and a working vocabulary. Diversity of risk dispositions within any team or organisation is a potential problem if not recognised, and a potent survival factor when it is. Appreciation of the complementary nature of the different Risk Types and their even distribution are levelling factors that make the objective of mutual respect for different risk dispositions eminently realisable. The legacy of the financial crisis has been toxic in its focus on deficiencies, blame, uncertain boundaries of acceptability and preoccupation with integrity. Maybe what is needed is a fresh start and the openness, optimism and inclusiveness implied above. Combined with a purposeful culture of coaching and development, this might be a good place to begin.

 

First published in Enterprise Risk.