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Managing the Psychological Aspects of Risk

The issue of risk in project management is a crucial one but little account is taken of the unique contribution that people’s individual differences play in the management of risk. Research carried out to date has demonstrated that individual personality factors play a determining role in the extent to which people are likely to be risk takers or risk avoidant.  Risk behaviour tends to be biologically patterned i.e. some people are likely to be consistent risk takers, some are consistently risk averse and some are willing to take risks in some areas of their life. If project managers are serious about managing risk, they need to understand their team member’s individual propensity for and attitudes towards risk taking so that they can more effectively match people to roles and manage risk more strategically.

[ribbon-light]The personality factors associated with risk taking[/ribbon-light]

Psychological research over the last 50 years has identified five factors of personality that are deeply rooted and consistent throughout our working lives. These five factors are:

  • Extraversion (how outgoing and sociable we are)
  • Conscientiousness (how self disciplined and dutiful we are)
  • Neuroticism (the extent to which we experience the more negative emotions such as anxiety and anger)
  • Openness to Experience (the extent to which we are open to new ideas and experiences)
  • Agreeableness (the extent to which we co operate with others and show compassion)

[ribbon-light]High Risk Takers[/ribbon-light]High risk takers tend to be more extrovert than average and score higher on ‘Openness’. High risk takers also score lower on ‘Neuroticism’  and  ‘Agreeableness’, indicating that they have less emotional intelligence and are less concerned about the impact on others. They also score lower on ‘Conscientiousness’ and therefore care less about the methods by which they achieve something. Because our personalities are a stable predictor of the level of risk that we are willing to take (and in what circumstances) it is useful to identify your high and low risk takers and use this information as the basis for risk planning, alongside other factors.

[ribbon-light]Personality questionnaires hold the key to assessing risk tolerance[/ribbon-light]Psychometric Personality questionnaires provide a helpful tool for project managers to understand this fundamental level of individual risk taking. There are a number of Personality Questionnaires based on the ‘Five Factors of Personality; that we looked at earlier e.g. The Occupational Personality Questionnaire (OPQ), WAVE, NEO PI-R, to name but a few. There is also a new personality questionnaire that is focused purely on risk taking i.e. the ‘Risk Type Compass’. This questionnaire explores both the deep rooted psychological factors that predispose us to certain levels of risk taking but then goes on to also look at the more transient factors that affect our attitude to risk taking on a day-to-day basis.  Qualifications and expertise are needed to accurately use and interpret these questionnaires but for the additional insight that they provide on risk management, it is worth bringing this experience into projects.

[ribbon-light]Author bio:[/ribbon-light]Sharon De Mascia is the Director of ‘Cognoscenti’ (Chartered Business Psychologists), www.cognoscenti.uk.com. She has 25 years experience of delivering change management and other organisational initiatives across both public and private sectors. Sharon is the author of ‘Project Psychology: Tools and Techniques for making your   Project a Success’ (Gower 2012) and is a supervisor for the global MBA at Manchester Business School. She is a guest lecturer at Liverpool John Moores University and the Manchester Metropolitan University. She is also an assessor for the British Psychological Society and the Health Professions Council. She is an examiner for the International Baccalaureate in Psychology. Sharon can be contacted on sharon@cognoscenti.uk.com

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