‘Rolling the dice’ by Amy Duff, Director Magazine, January 2011

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Risk is a topic that comes up a lot during our sessions on finance programmes in the context of control and project appraisal but does not always get its share of attention in the coverage of business decisions more generally. I was therefore attracted to this article because it seemed to look at risk more broadly, relating it to the behaviour of CEOs and success in business.

However I was disappointed because it was written in the rather superficial way that is all too typical of articles in Director magazine, which has become more and more lightweight in recent times. And it is based around a new (to me) questionnaire that is being marketed by an organisation called the Psychological Consultancy who are no doubt appreciative of the free advertising that the article provides.

However the article does make a few interesting points and the questionnaire will provide useful feedback; feeding the desire of most managers to know more about themselves is usually a popular strategy for trainers and consultants. But the key to the usefulness of any instrument of this kind is the extent to which it can help the individual manager and the organisation to be more effective and I remained unconvinced about this.

The questionnaire apparently separates managers into eight types of risk takers, as follows:

– Spontaneous
– Intense
– Wary
– Prudent
– Deliberate
– Composed
– Adventurous
– Carefree

There are short descriptions of the nature of each of the eight categories which were interesting and rang some bells, but there seemed to be a lot of overlap. Nevertheless it passed the first test of making me want to know where I and some of my colleagues would fall, particularly in the context of the entrepreneurial tendencies that are said by the author to be closely related to the risk profiles. Was MTP formed because we were all carefree and spontaneous? Sadly the answer was not clear because apparently a whole range of different types can start new businesses.

The only practical use I could relate to was the suggestion that the questionnaire can help to balance teams so that there are different types of risk takers in each one; this would seem to fit well with problems we have seen in companies where project teams are much too gung ho about projects and the financial person fights hard to hold them back. Clearly in those circumstances it is best if the finance person is not too spontaneous and carefree. But creating a balanced team with eight different types to consider feels rather complex and it would have been good to have less categories or at least some clustering of the eight types.

I would like to have seen more on this issue of balance but instead the article contains a number of comments from directors of small consultancies about their attitudes to risk and the extent to which it is ‘hard wired’ into fundamental nature or based on personal and business situation. This is an interesting issue but the comments do not provide anything new, other than the obvious point that risk taking is an essential part of business that has to be managed and balanced. I hoped that this article would have taken this obvious point into new and valuable areas but I was, to say the least, disappointed.

Click here to read the articles in full;
http://www.director.co.uk/MAGAZINE/2011/1_Jan/leadership-psychological-testing_64_05.html

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