What’s the difference between an entrepreneur and a wage earner, or a fast lane junky and a slow lane plodder? How about the difference between a philanderer and a settled husband, or an adventurer and a ‘stop-at-home’? 

In all these cases and many more, the most significant difference is likely to be in Risk Type. The way that we respond to risk, threat and uncertainty is individualistic and hard wired. Some people are by their nature anxious, fearful and prone to panic while, at the other extreme, others are calm, imperturbable and almost oblivious to danger. Similarly, while some are highly organised, conservative and conventional, others are impulsive, disorganised and excitement seeking.

These four extremes types mark the North, South, East and West of the Risk-Type Compass, the result of a two-year research project commissioned by Columbus Wealth Management and conducted by Psychological Consultancy.

Understanding human factor risk
Over the past few years news headlines have seen unprecedented coverage of risk, from the BP Gulf oil spill, to Enron, rogue traders, Frankenstein investment products, exposure to toxic dept, and the whole financial crisis that has affected world economies. Yet there has been a remarkable absence of discussion about the human factors involved in these crises. Even though there has been a string of cases where the risk-taking actions of individuals have caused havoc or even destroyed major institutions (Kenneth Lay, Nick Leeson, Fabrice Toure, Dick Fuld), the focus is almost exclusively on the processes and the procedures such as governance, compliance, regulation, taxation and not on the people. A machete, a fish knife or a sharp stick can all be associated with risk, but risk exposure depends upon whose hands they are in. Risk per se is not the problem.

All investment and enterprise involves risk. Many roles involve taking risks or managing risks and most other jobs will have a risk element. Risk Type is about more than just superficial attitudes to risk. Attitudes are variable over time and across different situations. They flex and change according to learning and experience.  Risk Type, on the other hand, is concerned with the underlying personality. It is deeply rooted and remains consistent. When things get tough and people are under serious pressure – or when heady success leads to hubris and feelings of indestructibility – judgement will be replaced by instinct and they revert to type.

All organisations need to strike a good balance of risk takers and those that are more risk averse. Assessment of Risk Type enables recruiters to better manage this aspect of recruitment and selection and to ensure an appropriate balance of Risk Types within the work force.

Recruiter is interested in finding out more about the attitude to risk within the recruitment sector. We are therefore offering the opportunity to participate in a profession-wide Risk Type survey and, at the same time, for you to learn about your own Risk Type. Participants will receive their own Risk-Type Compass report in complete confidence. However, the combined data should provide us with a unique picture of our industry and will be reported in the 24 November 2010 edition of this magazine.

Quick Guide to PsyKey Online Assessments

1) Go to http://www.psy-key.com
2) Choose Online Assessments
3) Enter access code: RTCRECRUITER
4) Follow the on-screen instructions

Geoff Trickey is managing director of The Psychological Consultancy