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How Your Team's Risk Profile Impacts Decision-Making

Every leadership team has a unique approach to risk. Some lean towards caution, while others embrace it head-on. This inherent "center of gravity" significantly influences how teams make decisions, especially in today's rapidly changing financial landscape.

In this article, we'll explore the concept of risk profiles and how understanding your team's tendencies can lead to more effective risk management and ultimately, greater success.

Two Sides of the Same Coin: "Wary" vs. "Composed"

Imagine two teams facing the same challenge: transitioning to a digital-only banking model.
  • Team Wary approaches the situation with caution, meticulously analyzing every potential risk and intricately planning each step. While this thoroughness can be an asset, it might also lead to indecision and missed opportunities.
  • Team Composed exudes confidence and readily tackles the challenge head-on. Their optimism and decisiveness are valuable, but they might overlook crucial risks or fail to adapt when unexpected issues arise.
Neither approach is inherently superior. The key lies in recognizing and leveraging each team's strengths while mitigating potential weaknesses.

The Risk Type Compass: A Framework for Understanding

The Risk Type Compass is a powerful tool that provides a framework for understanding individual and team risk profiles. By assessing factors like risk type, attitude, and tolerance, it reveals a team's "center of gravity" on a spectrum of eight distinct profiles, from "Wary" to "Composed" and everything in between.

This awareness empowers teams to:
  • Play to their strengths:  For example, a "Wary" team can leverage their analytical skills to develop robust risk mitigation strategies, while a "Composed" team can confidently navigate challenges and maintain momentum.
  • Address their weaknesses: "Wary" teams can implement strategies to avoid overthinking and promote decisive action, while "Composed" teams can incorporate processes that ensure thorough risk assessment.

Building a Cohesive and Risk-Aware Organization

Understanding risk profiles isn't just beneficial for individual teams; it's crucial for the entire organization. By assessing the risk profiles of both the management team and the board, credit unions can foster a more cohesive and risk-aware culture.

This alignment is particularly valuable in situations like:
  • CEO succession: Ensuring the new leader's risk profile aligns with the organization's strategic direction.
  • Board succession: Maintaining a consistent approach to risk management within the board.
  • Strategic planning: Facilitating informed decision-making and effective execution of new initiatives.

Unlocking Your Team's Potential

By embracing the Risk Type Compass and actively working with their risk profiles, credit union leadership teams can make more informed decisions, navigate challenges effectively, and confidently pursue their strategic goals.

Ready to discover your team's risk profile? Let's connect and explore how we can help you build a more risk-aware and successful organization.
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