Home Strategy The Risky Business of Not Taking Risks

The Risky Business of Not Taking Risks

by Dr. Linda Henman

In my work, I frequently engage in a broad-based leadership development program to prepare top talent for advancement. That was the case when I recently worked with a large construction company to groom Mike, one of the presidents, and Joe, the lead risk officer, for advancement.

During the 360 peer interviews I asked Mike how Joe could improve in general and how he could specifically help Mike with his growth objectives. Without hesitation, Mike answered, “I need for Joe to take me right to the edge of the cliff without letting me fall over. Right now he’s serving as the business-prevention arm of the business.”

I don’t think I’ve ever heard a better definition of what those in risk and compliance can do to support the organization. Take them as far as ethics and good sense will allow without letting them hurt themselves or the company, but don’t serve as the business prevention unit.

Theoretically, this sounds not only easy but also profitable. So why don’t more companies embrace Mike’s strategy? Fear. Most companies cut the edge of the cliff a wide berth, taking great pains to stay away from it. That’s the safe way; it keeps individuals from getting into trouble; and it protects the company from all things nefarious.

It also protects the company from growth and profit. Ordinary companies take few risks, preferring to stick with the status quo until overwhelming evidence surfaces that they should change. They want to outrun the competition but see no sense in making decisions that would create a huge gap between them and the next in line.  Decision-makers value steadiness over innovation and caution over risk. And they settle for ordinary.

It all starts with the right people making the decisions. When evaluating your company’s Risk Aversion Quotient (RAQ), start by assessing the people closest to the decisions. In this case, it was Joe. Ask yourself these five questions:

  1. When making recommendations, can this person go beyond the numbers to see patterns and anticipate consequences?
  2. Does this person understand how to separate “what” from “how”?
  3. Can this person keep a global perspective?
  4. Are priorities apparent to this person?
  5. When facing a complicated or unfamiliar problem, can this individual get to the core of the issue and immediately begin to formulate possible solutions?

Fortunately for Mike and the construction company, we could answer “yes” to all these questions about Joe. When Joe received the feedback about how others needed his guidance, he was able to offer advice, using his exceptional analytical reasoning abilities.

The company has doubled in size since my work with Mike and Joe. They have taken some risks during a time when their competition has hunkered down, and it has paid off. This company hired exceptional people in Mike and Joe and then steadfastly developed them until both were ready to move forward, proving once again that risky business decisions—provided they’re the right decisions—will position your for success.


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