Insights Blog

Being “Fit for Risk”

By Premod Varghese and Elyse Maltin, PhD.

When business leaders speak about risk, the conversation inevitably focuses on how to avoid as much of it as possible. This gives rise to countless ways of measuring, prioritizing, and mitigating risks. This perspective on risk is perfectly understandable, and indeed, is critical to running a business, but what if there is another way to think about risk that would allow leaders to have far greater impact?

There’s a certain payoff to operating in a mindset that is solely focused on avoiding risk for the purpose of reliably predicting and delivering results: it’s familiar, we can protect ourselves and our interests, and we can have some level of certainty when we commit to something that we’ll be able to achieve it. There is a cost to this mindset, though. If you’re focused on avoiding risk, your orientation will always be around staying safe, and you will be hamstrung in terms of taking the kinds of risks that could generate significant returns.

Instead of focusing on mitigating risk within your current business, and avoiding the risks associated with taking what Amazon CEO Jeff Bezos refers to as “bold bets”, we invite you to flip the script on risk and ask yourself a different question: what are you giving away by looking at risk as a threat or from the perspective of what you could lose? What value are you taking out of the business by operating in a way that is familiar and predictable?

It’s perfectly natural to want to stay safe. Our brains are wired to have things be predictable–to avoid, at all costs, what we consciously and unconsciously perceive as threats to our survival. If you want to elevate your impact on your business, however, sometimes the most valuable place to look is at what really matters: what is all of this in service of? What’s the point? Then, consider: what are you giving away by not pursuing opportunities that could cause a demonstrable step change in performance? Given our default way of thinking about risk, this is not an easy thing to take on, but if you’re not willing to look, you may miss fundamentally game-changing opportunities. As Pepsi CEO Indra Nooyi puts it: “The challenge of the leader is to look around the corner and change before you need to change””

Being “fit for risk” does not simply mean having quantified and mitigated away all the risks your business may face.

It means confronting head-on that the way you are operating, inasmuch as it is familiar, predictable, and safe, could be constraining your performance and producing diminishing returns. When we work with our clients on creating and delivering exceptional results, there is always a moment when the conversation switches from “why we can’t” to “what’s possible here”. That’s the moment when we know the risk script has been flipped and they’re ready to take something on that represents a fulfillment of what’s actually important to them.

Once you’ve switched your view in this way, you’re positioned in such a way that risk is no longer something to evade, but something to take on in a prudent, thoughtful, productive manner. This opens up an entire world of possibility, where you can use your current platform to build a growing, sustainable organization. That sense of possibility will not live on its own. True leadership comes not just in creating a bold vision for the future, but in keeping it alive through conversation. People’s natural orientation to risk will arise anew, every time, and generating the vision will require continuing to alter the conversation from avoiding the risk of taking these “bold bets” to what you could be giving up by not taking them.

“Life doesn’t always present you with the perfect opportunity at the perfect time. Opportunities come when you least expect them, or when you’re not ready for them. Rarely are opportunities presented to you in the perfect way, in a nice little box with a yellow bow on top. … Opportunities, the good ones, they’re messy and confusing and hard to recognize. They’re risky. They challenge you.”

– Susan Wojcicki, CEO of YouTube