Do you think risk and reward go together? Or is the reward an outcome of risk? Let's say someone on your team is driven by risk and we suppose they are carefree. Someone else on the team is risk-averse and we categorize them as wary. Now the team has to make a decision about a product or how to put a presentation together. In either scenario, the carefree person wants to go for it. The wary person wants to hold back on the decision. Depending on team dynamics, the team may find themselves out of balance or even stuck. As a result, emotions rise, and people my stop understanding each other.
The stuck feeling the team is experiencing has nothing to do with talent or skill. The team is not performing well at the moment because they all have different tolerance for risk. Risk brings with it, as change does, a certain emotional tone and tenor. We each have a tolerance for risk. As that tolerance becomes challenged, our emotions, anxiety, and fear can all increase. Then we feel the less risky something is to us.
There are 8 different types of risk profiles. As a leader, understanding these risk types will help you navigate team dynamics and maximize the risk profiles of each member on your team.
8 Risk Types
1 - Excitable
At the root of this is impulsivity and an attraction to risk, combined with distress and regret if things go wrong. This risk type tends to be passionate and fluctuates between excited enthusiasm and pessimistic negativity. Such people are both frightened and excited by their impulsiveness. They are likely to respond emotionally to events and react strongly to disappointment or unexpected moments.
2- Intense
Those who fall into this dimension tend to be anxious and worrisome. People in this risk type expect the worst, they are high-strung and alert to any risk or threat to their well-being. They are emotionally invested in their decisions and commitments and take it personally when things don’t work out. They tend to be very passionate about things, but their mood can swing drastically from day to day.
3- Wary
Characterized by a combination of self-discipline and concern about risk, these are cautious, organized people who highly prioritize security. They are likely to be alert to the risk aspect of any investment opportunity before pressing into any potential benefits. These people have a strong desire to know exactly what to expect, and, as a result, may find it difficult to make decisions.
4 - Prudent
Those in the prudent risk type have a high level of self-control. This type is organized, systematic, and conforming. Conservative and conventional in their approach, such people prefer continuity to variety and are most comfortable operating within established and familiar procedures. They are generally very cautious and suspicious of any new ventures and may find reassurance in sticking with what they know.
5 - Deliberate
These individuals have high levels of calm self-confidence combined with caution. This type tends to be unusually low-key, even in situations where most people would panic. At times, they seem almost too accepting of risk and uncertainty. However, they are often well balanced by a desire to do things in a planned and systematic way. Because they are highly organized, compliant, and like to be fully informed about what is going on, they are unlikely to walk into anything unprepared.
6- Composed
This type is cool-headed, calm, and unemotional, but at the extreme, they may seem almost oblivious to risk. Their outlook will always be optimistic. These people take everything in stride and appear to manage stress very well. They are not particularly impulsive but are also not overly organized or systematic.
7 - Adventurous
At the root of this type is a combination of impulsiveness and fearlessness. Extreme examples of this type are people who have a disregard for custom, tradition, or convention. They are seemingly oblivious to risk. Their decision-making is likely to be influenced by both their lack of anxiety and their impulsiveness.
8 - Carefree
Those in this category dislike repetitive routines and do not like being told what to do. Such people may seem excitement-seeking and, in extreme cases, reckless. Lack of attention to detail and preparation may cause their intentions and objectives to seem vague. Their impatience, impulsivity, and distractibility sometimes leave them exposed to hasty decisions.
These risk types all come from an assessment that is published by Multi-Health Systems called the “Compass Risk Type Indicator”. The tool is designed to assess the individual risk type of each person on a team and then give the team a picture as a whole. As we design workshops around this Compass Risk Type Indicator it is always interesting for a team to look at a current issue they face, study each other’s Risk Type, and work through possible solutions.
There is potential for risk in almost everything we do, and there are many different factors that influence a person’s readiness to take a risk at any particular moment. As leaders, we must be aware of the way those on our team interpret and respond to risk, beginning with ourselves.
The next time your team is stuck in making a decision, look at the list of risk types and ask if the source of the stall could be attributed to a different approach to risk.