Identfying the 'chancer'

[Brown and Boris]

Had a meeting with a client this week (large HR outsorcing company). They started asking if I had any methods of screening for 'chancers' (risk takers) and how something could work in the financial services sector ( I develop staff sifting/screening tools).

May have been a throw away line, but given the recent media on the FS sector it got me wondering if I shouldn't start to develop something, but I thought being a risk taker was all part of being successful in many types of business? Unless of course they just want to identify the out of control risk taker?

So, at what point does a risk taker stop becoming an asset and become a liability?

Edited by Brown and Boris on Monday 4th May 20:40

[Teocali]

When they start to cost the company money or take risks that are over and above the current culture?

I guess all you can provide is a risk score upon which the company would decide if the individual was suited that company at that time. As you say someone classed as a risk taker now may have been conservative 10 months ago!

Very hard to score though, interested to how it could be done.

[Jasandjules]

Moral, physical or what?

[Brown and Boris]

Good point. Although they may well be related I think I am talking about people take fiancial/career risks.

I would have thought there was an interaction with 'risk taker' and emotional stability; risk takers who are emotionaly unstable are likely to act implulsively.

Edited by Brown and Boris on Friday 8th May 07:15

[JustinP1]

Thinking about it for a while, I am not sure that even if you could test for it, the results would be very subjective.

As a businessman myself I would guess that I would be in a demographic of risk takers.

Maybe the top 10%. Maybe the best you could hope for is to give a percentile and let employers pick what percentile they want. Even that is subjective, as although I would classify myself as being a risk taker, I will only risk in areas I know about enough to make an educated decision.

I believe that second factor would be more important than the first.

[Somewhatfoolish]

I think, and this is an educated guess, that this is the same principal-agent that caused ludicrous trading, but in reverse.

Implement ultimately doomed trading strategy:
Risk: Get fired, but company takes the real hit
Reward: Massive bonus

Implement strategy to avoid employing risk takers:
Risk: Company takes hit through excessive conservatism
Reward: Keep job, and get a (possibly massive by 'normal' standards) bonus.

Your thoughts?

[Simpo Two]

From the 1980s: 'Nobody ever got sacked for buying IBM... but nobody ever got promoted either'

[Brown and Boris]

I think they are talking about something which identifies the rogue trader; the one whose ego/instability and cunning present a risk of them taking bigger risks than would be wanted. I suspect the criterion measure could be the issue.

[Somewhatfoolish]

I think anyone who thinks that will work is an idiot.

[Daisy Duke]

Brown and Boris said:

I think they are talking about something which identifies the rogue trader; the one whose ego/instability and cunning present a risk of them taking bigger risks than would be wanted. I suspect the criterion measure could be the issue.

Yes it would be trying to define the point at which justifiable self confidence becomes arrogance. As JustinP1 said, what seems like a highly risky move to some, others would see as a calculated risk taken with years of experience. Such things are notoriously difficult to quantify, as I myself have experienced. I believe that I'm fairly conservative with regard to financial dealings, yet when I took such a test I came out as a risk taker, purely because I was being asked about matters that I understood well and many of my caveats of 'under certain circumstances' weren't taken into account.

You would be entering the realms of psychological testing with scenarios that the applicants couldn't possibly have previous experience of and see how they reacted. But remember, many of the most accomplished business people are actually borderline psychopaths!

[JustinP1]

Brown and Boris said:

I think they are talking about something which identifies the rogue trader; the one whose ego/instability and cunning present a risk of them taking bigger risks than would be wanted. I suspect the criterion measure could be the issue.

In which case, then maybe thinking 'out of the box' rather than for a direct risk taking issue may be the key.

There may be a 'blueprint' of a number of connected issues to get a type. That way you get around the 'experience' linkage directly.

I guess you would have to test some confirmed rogue traders in detail to find a pattern. Without that, it would just be a theory.

If you found that the rogues were for example in the top 10 percentile of ego and also in the top ten percentile of being a maverick, and this was only 5% or less of all traders then you could get a defined link.