Defining Risk Attitudes


A project manager must be able to lead in an environment of uncertainty. The best process that offers the structure for handling such uncertainty is Risk management processes. The uncertainty is challenging naturally, however, if it’s not handled with consistent methods, it heightens. Therefore, a project manager needs to create a proactive and positive culture when it comes to risk management.


What is Risk Attitude?


Risk Attitude can be defined as a chosen state of mind concerning those uncertainties that could have a positive or negative effect on objectives. Risk Attitudes are generally implemented subconsciously and without mindful validation. However, like any other attitude, risk attitudes are a choice for an individual or group.


Project Managers must launch a regular method for evaluating and responding to risk across the enterprise. One problem with consistency in managing risk, is that people logically have distinct attitudes toward risks, and those attitudes vary with circumstance. Which brings us to the type of attitudes:


Types of Attitudes

1. Risk Aversion

This is a type of attitude where an individual inclines toward certain as opposed to uncertain events. An average person is usually like this. The project manager has to identify that accomplished organisations often perform best when they are aggressive. However, you can decide to pay a penalty to avoid risk. Project managers are more often than not risk-averse as they may intentionally forgo opportunities.


A Risk aversion type will leave a good chance of more profits on the table and look for a more certain scenario instead. Thereby settling for less than would be expected as a result.

2. Risk Seeking

This is a type of attitude or behaviour where a person gravitates towards uncertain activities in place of more certain ones. You display a risk-seeking attitude when you are ready to pay a penalty to take a risk. Generally, people are more risk-seeking in poor condition and more risk-averse in a wealthy position.

3. Risk Neutral

This type of individual possesses an indifferent attitude toward risk. These individuals usually display their character when decisions are based exclusively on expected monetary value.


It’s essential for a program manager who is trying to manage risk regularly to know the project manager risk’s attitude. The type of risk attitude exhibited can be a function of his observed state of wealth of the project. That is, the project manager will be risk-seeking if the budget for the project is adequate while he will be risk-averse if the budget is inadequate.


The program manager must be mindful of the strong influences of risk attitudes on decisions and consider them.


To test your project manager’s risk attitudes, you can ask questions like; “if we had to deliver this project 30% sooner, what would be the top three recommendation you would make to accomplish this?”. A risk-seeking project manager will facilitate the risk analysis while the risk-averse project manager will decide to stick with the current plan.

Determining Risk Attitude


After knowing the types of risk attitudes, the next thing is to study the elements that determine risk attitude. Every decision-maker is risk-takers because every decision has an element of doubt about them. The rate at which every decision-maker enjoy taking risk depends upon individual attitudes.

The problem of deciding whether to sell your product or services depends on four elements. These include:


· Possible actions

· Possible events

· Result or payoff of each action for each event.

· The possibilities that the event will occur.


To select the right action, you need to build a decision chart to simplify the comparison of the actions, events, payoffs, and the possibilities of the event occurring.

Managing Risk


The risk-averse decision-maker places a huge emphasis on the consequences of an unfavourable event. While the risk-seeking decision-maker places a huge emphasis on the likelihood of a lost opportunity. There are two possible ways of dealing with risk which is; controlling risk and transferring risk. However, from the start, it has been discussed that risk can be accepted or it can be avoided.

Final Word


As a program manager, it’s important to know the type of risk attitudes that your project manager possesses. Dealing with risk is an important part of the program manager’s job. This will determine the success or failure of your project. Once you have decided on the plan and process of your project, you can make use of LaevoIGNITE Digital PMO software to execute the process.


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