SUOMI
 

DEVELOPING RISK AWARENESS

Dr Richard Plenty and Terri Morrissey provide their thoughts on: The psychology of risk management.

 

Airports that manage risk transparently well are more likely to be attractive to investors and better able to attract the capital they need to develop.

The ability to assess, manage and take well judged risk lies at the heart of successful business leadership, but to do so well is a challenge. Whilst there is an excellent body of work on risk management focusing on the objective assessment of risk and how this can be most effectively managed and controlled, managing ‘mindset’ remains difficult.   

Commercial organisations can struggle to ensure that peoples’ attitudes and behaviours strike a sensible balance between excessive caution and reckless adventure. Too wary, and the business may fall behind; too risky, and ethics may be compromised and financial disaster could ensue. 

The aviation industry has long been expert in finding ways of minimising operational, safety and security risks through the use of standardised processes, procedures and protocols which have a bedrock of ‘non-negotiable’ operating practices. However, as the industry continues its shift out of public ownership and becomes increasingly commercial and competitive, a different approach is required for non-safety critical systems.

Managing risk in these circumstances requires an understanding of psychology and the factors which influence individual decision- making rather than focus on regulation and organisation procedures. Initiative, pro-activity, entrepreneurial spirit and empowerment are all desirable features of the high performance organisation.  These features can be stifled by unnecessary bureaucracy. 

People’s propensity for risk-taking depends on the nature of the situation – the size of the risk, the degree of choice, and the likely consequences. It is also shaped by: 

Organisation culture: The organisation’s values and reward system, exemplified by  the role model behaviours of leaders, managers and peers.

The perceived risk: This is likely to be influenced by recent runs of ‘success’ or ‘failure’ (those on a winning streak take more risks), publicity, and emotional cues.

Personality and risk appetite: People fall into different ‘risk types’ with different styles and approaches to taking risk, depending on their need for excitement, their tolerance of uncertainty and ambiguity  and how anxious they become when faced with the unknown. 

The key to managing risk in a high performance culture is to develop an awareness of it and thus raise the standard of ‘risk intelligence’ in the organisation. This can be done by encouraging greater transparency, openness and dialogue. 

Building awareness of individual propensity to take risks provides an excellent starting point to help identify and review those situations where risk judgements are critical. Breadth and depth of knowledge and relevant expertise helps people to be more objective, confident and sound in their judgements. 

Invest in developing risk awareness, and reap the returns!

About the authors

Terri Morrissey and Dr Richard Plenty are directors of This Is... and run top team workshops on contemporary leadership issues including the psychology of risk. They can be contacted at info@thisis.eu

Article originally published in Airport World Magazine March 31, 2015.

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Dr. Richard Plenty
Managing Director of This Is
 +44 7768 773205
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Terri Morrissey
Founding Director of This Is
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