There's been a lot of research lately into how companies balance risk into their decision making. But this study Too Negative to Take Risks? The Effect of the CEO's Emotional Traits on Firm Risk goes one step further by looking at how the personality of CEOs determines risk taking behavior.
It found that CEOs with so-called negative personalities – if they were for example more anxious or nervous – were less likely to take risks. Education also played a part. More qualified CEOs tend to take a riskier approach to business.
The study was based on a 2004 survey sent to managing directors and general directors of Spanish investment and savings banks.
The findings are significant for organizations looking to recruit. Depending on how much risk they want to take on, they should be using personality tests during the recruitment process.
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