Generally in business, and particularly in financial services, people associate risk with the markets or economy. What we fail to drill down into are the risks caused by human behavior. Another way of looking at this is to consider how people handle the market risks. What decisions do they make? What solutions do they come up with? How do they manage their emotions? How do they communicate?
In essence, the market risks can be managed or exacerbated by human behavior. So, what needs to be better understood is how your people are going to handle market and economic risks that may be impacting your business. This will be particularly important when they are under pressure. What are their blind spots? What are your blind spots? Then, how will you manage your people so the risks are better managed?
Through our Financial DNA profiles we are able to reliably predict how people will behave and therefore the risks they may cause. Will they take too many chances? Will they be too impatient? Are they too independent and not accountable? We have found that the profiles are able to provide great insights into the true behavior of people when they are under pressure. Having this information can help you put in place the right management controls and also to provide the individuals with more self-awareness of how they will make decisions which could cause or exacerbate market risks. There is no doubt a large part of the success or failure of businesses in the long term comes down to being aware of and managing human behavior. You only have to look at some of the major corporate and banking disasters to see this.
So how aware are you of the risks that your people could be causing to the future of your business?