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May 02, 2011

Understanding your Risk Propensity

To make the best decisions you can, it is important to understand how you approach the decision making process.

For each decision you make, there are unknown elements that you can't control. Consciously or subconsciously, you evaluate these unknowns and the potential outcome of each alternative when you take a decision. However, the payoff and the risks involved are not absolute: They're estimated, and are therefore colored by your perception. In turn, your perception is strongly influenced by your propensity to take risks.

By nature, some people are more tolerant of risk than others. We all know people who thrive on big risks. People who gamble or take part in off-piste skiing are typically pretty risk tolerant, as are those who invest in new markets and emerging technologies. To them, the excitement and potential rewards make the risk worthwhile. Before they participate in these activities, though, they make a decision to do so. This then implies that decision making is affected by your risk profile. When you're amenable to risk, you tend to consider and embrace riskier options. People who need more stability and control tend to choose far less risky options.

So, in thinking about your decision making, you need first to understand your attitude to risk. Are you risk averse, a risk taker, or does it depend on the situation? The amount of risk you accept in your decisions is related to your overall risk profile. Some people are simply more cautious by nature. So what the cautious decision maker deems high risk, may have a lower risk assessment when analyzed by the "courageous" decision maker.

This is important because we all have to take risks in our life if we're to achieve our full potential, and it makes sense to try to find the middle path between suffocating caution and reckless optimism. The ability to find this middle path, to be able to take risks intelligently, is a great advantage in many business situations.

Research has shown that your Personality Type is a good way of predicting your risk propensity. therefore,before making decision, do you understand yourself well..what is the attitude of taking risk?


April 26, 2011

not only technique but also attitude

Kent Crookston from Brigham Young pointed out that most of the decision maker focus on the process of making decision rather than their attitude. he also said that no matter what kind of tool you use, if you have right attitude you will success.

people usually think that which option should I go for and forget about where I want to go, what I want to get, how I can afford for the result etc.

positive, modest and compose.

bad decision usually cause by angry or fear emotion, intoxicated or impatient will also cause bad decisions. for example, in the stock exchange market,those dealers will show such emotion when they see the stocks raise also when stocks decrease sharply. all those emotions definatly can not let them make a robust decision.

as this module introduced so many tools, but when we make decisions, do we ever think about we should have what kind of emotion when we discuss with our team members? or even make decision alone?

also, leaders should think about what kind of attitude they should hold for dealing with the whole process


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  • I agree with you, and also I think it is not only about attitude, and also of the personality. Diffe… by on this entry
  • i think attitude could be one of factors reach successful just like u mentioned there are many emoti… by on this entry

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