Coaching at Work road-tests the personality-based assessment tool Risk-Type CompassTM
It’s what you make it.

The tool

What is it?
The Risk-Type Compass™ is a personality-based assessment tool which, as its description suggests, seeks to help individuals explore their disposition to risk and their capacity to manage it.
The tool has its roots in the financial and investment sectors. Independent financial advisers (IFAs) need to understand clients’ underlying appetite for risk so they can be best positioned to offer appropriate advice regarding suitable investment portfolios. With this in mind, a large IFA business approached the Psychological Consultancy (PCL) to develop a tool.
PCL then carried out further research and trials involving more than 2,000 participants in professions where risk is a key feature of their work, before bringing the tool onto the market in November 2011.

How does it work?
How often has someone said to you that they are a good judge of character, only for them to be surprised by the actions of others? We all tend to underestimate how different we all are, which in part is driven by the common habit of judging others by our own standards. And we can easily get our assessments quite wrong.
A better understanding of risk types and risk attitudes can help us evaluate the natural temperament of others and their propensity for risk.
Risk-Type Compass offers individuals and teams the opportunity to better navigate their ‘map of the business world’. It is based around three core elements:

1. A measure of personality = Risk Type
2. A measure of attitude = Risk Attitude
3. A measure of tolerance = Risk Tolerance Index

PCL’s validated research into risk has led to eight distinct types that define our individual differences in risk taking and ability to manage risk: Wary, Prudent, Deliberate, Composed, Adventurous, Carefree, Spontaneous and Intense.
Four of the risk types are designated as ‘pure types’ and form two conceptual orthogonal scales on the compass:
Scale Risk type
Calm: Emotional Intense  Composed
Daring: Measured Prudent  Carefree

The remaining four types are designated complex.
Lying behind these eight risk types are 18 sub-theme factor analyses which underpin the Risk-Type Compass and are drawn from the Five Factor Model.

The administrator

Using the tool
Assessors using the tool have several layers of context that they need to manage carefully.
First, you must ensure the participant is comfortable with the terminology used. In some cases, the risk type descriptor did not initially sit well.
Second, you need to address the participant’s consideration of the situational context of risk taking and other circumstances that have an impact on their attitude towards risk.
Third, and more difficult, you have to use second and third perspective to determine if there were other key influences on participants’ natural risk tendencies.
Once past that contextual ‘due diligence’, discussions around participants’ risk type and attitude towards risk were good. These discussions can lead to participants re-evaluating their map of the world.
In a number of cases, participants’ exploration of their adjacent risk types was as productive as that of their primary risk type.
Overarching their self-awareness was the insight and appreciation they gained in how varied other people are in their approach to and dealings with risk. All of which led to recognition and acceptance of their Risk Tolerance Index – their natural temperament as well as reactivity to risk and uncertainty.
It was also useful to consider how the Risk-Type Compass characteristics map across to the colours used in the Insights personality profiling tool.
Personality is dynamic: often what we want and what we expect are in some form of conflict. The Risk-Type Compass has the potential to be a good catalyst for a coaching conversation around people’s “dark side”.2
In a broader coaching context, and for business and executive coaching, the Risk-Type Compass can help individuals unravel some of the more invisible, intangible aspects of their character.

The eight risk types of the Risk-Type Compass:

WARY
Very low risk tolerance. Self-disciplined and cautious, they are highly organised and anxious about securing their future, but fearful that things are bound to go wrong.
PRUDENT
Low risk tolerance. Self-controlled and detailed in their planning, this type is organised and systematic. Conforming and conventional they are most comfortable with continuity and familiarity.
DELIBERATE
Average risk tolerance. Systematic and compliant, they tend to be calm, optimistic and self-confident. They experience little anxiety but never walk into anything unprepared.
COMPOSED
High risk tolerance. The composed type is cool-headed and optimistic. Seemingly almost oblivious to risk, they take everything in their stride and bounce back from disaster.
ADVENTUROUS
Very high risk tolerance. The adventurous type is both impulsive and fearless. They combine a deeply constitutional calmness with an impulsivity and a willingness to challenge convention.
CAREFREE
High risk tolerance. Spontaneous and unconventional, they are daring, excitement seeking and sometimes reckless. Their impatience and imprudence makes life exciting.
SPONTANEOUS
Average risk tolerance. Uninhibited and excitable, they enjoy spontaneity, but are distraught when things go wrong. Passion and imprudence make them exciting, but unpredictable.
INTENSE
Low risk tolerance. Highly strung, pessimistic and self-critical, they take things personally and feel defeated when things go wrong.

Risk-Type Compass: pros and cons

UPSIDE
Based on rigorous research
Offers typology and vocabulary for risk planning, and discussion on individuals’ tolerance to and appetite for risk
Helps organisations assess individuals’ suitability for risk-related roles
May help organisations reduce risk
Can be used with individuals, teams and at a wider organisation level to assess ‘risk landscape’ and culture

DOWNSIDE
Takes time to get to grips with
Assessors have several layers of context to manage

Clive Steeper has been a business leader and change executive for 30 years, operating in challenging technologies and high risk industries such as motorsport. He is an executive coach and consultant with corporate and private equity owner clients. www.avasst.com

References
1 R R McCrae & P T Costa, ‘Validation of the five-factor model of personality across instruments and observers’, in Journal of Personality and Social Psychology, 52, pp81-90, 1987
2 E Nelson & R Hogan, ‘Coaching on the dark side’, in International Coaching Psychology Review, 4, 1, March 2009 ©The British Psychological Society, ISSN: 1750-2764

Coaching at Work, Volume 7, Issue 5