A Deep Dive into Human Risk-Taking with the Risk Type Compass

The Challenge: Why Human Risk is the Unseen Variable

Traditional risk management excels at quantifiable risks – credit risk, liquidity risk, interest rate risk. But countless strategic missteps, missed opportunities, and even organizational friction can stem from the qualitative, human factors:

• Subjective Perception: Different individuals perceive the same risk differently. What's a bold opportunity to one might be a reckless gamble to another.

• Behavioral Biases: Inherent personality traits can lead to consistent biases in decision-making, whether it's excessive caution or unwarranted impulsivity.

• Group Dynamics: Teams often behave differently than the sum of their individual parts, leading to phenomena like "groupthink" or risk polarization.

• Misalignment: A strategic goal to innovate might clash with a leadership team naturally predisposed to extreme caution, leading to internal friction and stalled progress.

Without objectively understanding these human dimensions, your credit union's risk management efforts remain incomplete, leaving significant blind spots.

Our Solution: Unlocking Risk Intelligence with the Risk Type Compass™

The Risk Type Compass™ is a sophisticated psychometric tool that quantifies the deeply rooted personality dispositions that influence how individuals behave in risk-oriented situations. It’s not about judging "good" or "bad" risk-takers, but about understanding the unique "Risk DNA" within your organization.

Our multi-layered process allows you to gain unprecedented clarity:

Phase 1: Understanding Individual Risk DNA – Risk Types & Attitudes

We begin by assessing individuals, delving into the stable psychological drivers of their risk behavior.

Concept: Individual Risk Types

The RTC identifies eight distinct Risk Types (and a central Axial group) based on two fundamental, underlying dimensions:

• Emotional:Calm: Measures one's inherent "fearfulness" – from being highly apprehensive and emotionally reactive (Intense, Wary, Excitable Types) to being calm, confident, and resilient (Composed, Adventurous, Deliberate Types).

• Daring:Measured: Measures one's inherent "impulsivity" and need for certainty – from being reckless, spontaneous, and open to ambiguity (Carefree, Adventurous, Excitable Types) to being cautious, systematic, and conforming (Prudent, Deliberate, Wary Types).

Each Risk Type represents a unique disposition, influencing how individuals perceive opportunities, react to uncertainty, and handle setbacks.

Concept: Risk Attitude

While Risk Type is stable, Risk Attitude reflects more transient variations influenced by specific experiences and situations (e.g., financial risk, social risk, health & safety risk). The RTC also provides insights into these domain-specific preferences.

Why it's Helpful:

• Self-Awareness for Leaders: Executives and board members gain profound self-insight into their own inherent biases, enabling more objective and considered decision-making.

• Predictive Insight: Understanding an individual's stable Risk Type allows for more accurate predictions of their consistent behavioral patterns in risk-laden situations.

• Targeted Development: Identify specific areas where an individual might need to consciously adjust their natural disposition to align with role requirements (e.g., a "Prudent" leader needing to foster more "Adventurous" thinking in innovation roles).

Phase 2: Navigating Team Dynamics – Collective Risk & Interaction

Individual risk types don't operate in isolation. Their interaction within teams profoundly shapes collective decisions.

Concept: Team Risk Dynamics

When individuals with similar Risk Types cluster, or when opposing types clash without understanding, team dynamics can be impacted. For instance, a team dominated by "Adventurous" types might unknowingly amplify risk, leading to a "Risky Shift," while a team of "Wary" types might fall victim to a "Cautious Shift," missing out on vital opportunities.

Why it's Helpful:

• Optimize Team Composition: Gain objective data to build more balanced, high-performing teams that strategically leverage diverse risk dispositions, ensuring a healthy tension between innovation and prudence.

• Improve Collective Decision-Making: Facilitate discussions around team biases, helping groups to consciously mitigate "risky shift" or "cautious shift" phenomena and make more informed, deliberate decisions.

• Foster Mutual Respect: By understanding the underlying "why" behind differing viewpoints (e.g., a "Prudent" board member's need for detail vs. an "Adventurous" CEO's drive for speed), teams can appreciate diversity and collaborate more effectively.

Phase 3: Mapping the Organizational Risk Landscape

Scaling up from individuals and teams, we create a panoramic view of your credit union's entire risk culture.

Concept: Organizational Risk Landscape

This involves visualizing the distribution of different Risk Types across departments, divisions, or the entire credit union. It allows you to identify "hot" spots (concentrations of high risk-takers) or "cold" spots (areas of extreme risk aversion) that might not align with your strategic goals.

Why it's Helpful:

• Strategic Talent Placement: Inform decisions on who is best suited for roles requiring high levels of innovation, meticulous risk oversight, or steady execution.

• Culture Alignment: Objectively assess whether your overall organizational culture's risk appetite (as defined by your people) truly supports your declared strategy. For example, a growth-oriented strategy won't succeed in an overly "Wary" or "Prudent" culture.

• Targeted Cultural Intervention: Pinpoint specific areas where cultural adjustments or targeted development programs are needed to foster a more balanced and effective approach to risk.

Phase 4: Informing Strategy & Development

The insights gleaned from your credit union's risk intelligence are directly actionable.

Concept: Strategic Integration

The data from the RTC becomes a powerful feeder for your strategic planning sessions, governance discussions, and leadership development initiatives. It helps evaluate whether your board’s collective risk disposition is aligned with the credit union's strategic goals and desired risk appetite.

Why it's Helpful:

• Validated Strategic Choices: Ensure your strategic decisions are not only financially sound but also behaviorally viable, considering the predispositions of those who must execute them.

• Proactive Problem Solving: Identify and address potential behavioral biases that could derail strategic initiatives, impede innovation, or expose your credit union to unforeseen financial or operational risks.

• Sustainable Leadership Development: Create highly targeted development plans for leaders and teams, fostering emotional intelligence and a more nuanced understanding of risk.

The Glatt Consulting Difference: Beyond the Blueprint

Our Risk Intelligence & Leadership Dynamics service, powered by the Risk Type Compass™, moves beyond surface-level observations to provide a deep, data-driven understanding of the human element in your credit union's risk-taking. We ensure these profound insights translate into actionable development and strategic improvements, building a truly risk-intelligent organization.