Willingness to take risks

Risk-taking is a dimension of personality. It describes a person's tendency to take risks and take advantage of a big opportunity despite a high risk of loss instead of carefully avoiding risky situations in order to minimize losses (Sitkin & Weingart, 1995). In doing so, a person's individual willingness to take risks can be classified on a continuum between the two poles careful and willing to take risks. The value of each person can therefore be located at one point on the following scale:

Careful

Rather careful people feel most comfortable in situations where they are in control of any losses and can avoid risk.

They often check very carefully whether a decision really involves no risk at all – which is why they are often well suited to activities in auditing or jurisprudence, for example.

At the same time, too much caution can also lead to inability to act if risk is avoided at all costs.

Risk-Taking

Rather risk-taking people feel most comfortable in situations where, despite some uncertainty and potential losses, they have the chance of making a big profit.

They see the opportunities rather than the potential losses when entering a risk. This can be an advantage, for example, in sales, if a lot of time is invested in acquiring a potential major customer, but where the conclusion of the contract is uncertain.

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Benefits in a professional context

As you can see, the best fit for a vacancy depends not only on the person's willingness to take risks, but also on characteristics of the vacancy.

Depending on the focus of the company, both a careful and risk-taking person may be the best choice. When it comes primarily to innovation and creativity, it is often worthwhile to take risks (García-Granero et al., 2015). When it comes primarily to stability and security, risks should usually be avoided. In addition, it always depends on the company's environment. In predictable environments, risks can be better estimated and taking them pays off far more than in dynamic, constantly changing environments (Gilley et al., 2002).

With a personality diagnosis, you can therefore reduce the risk of mis-hires and at the same time ensure higher diversity in the workplace!

Sources

• Gilley, K.M., Walters, B.A., & Olson, B.J. (2002). Top management team risk-taking propensities and firm performance: direct and moderating effects. Journal of Business Strategies, 19 (2), 95.
• García-Granero, A., Llopis, O., Fernandez-Mesa, A., & Alegre, J. (2015). Unraveling the link between managerial risk-taking and innovation: The mediating role of a risk-taking climate. Journal of Business Research, 68 (5), 1094-1104.
• Sitkin, S.B., & Weingart, L.R. (1995). Determinants of risky decision-making behavior: A test of the mediating role of risk perceptions and propensity. Academy of Management Journal, 38(6), 1573-1592.

Aivy captures willingness to take risks in its decision-behaviour assessment.