Your Biggest Risk? Playing It Safe

Ever made a big call as a leader that looked brilliant – until it wasn’t?

And then came the blame game. Right?

“What went wrong?” “Why didn’t YOU see it coming?”

Psychologists have long proven it – we fear losses more than we celebrate gains. A bad big bet decision often triggers defensiveness, hesitation, and can lead to risk-aversion.

I have heard it said many times. The difference between doing business in the US vs the UK/Canada/Australia/NZ, is in the US they are more ready to take a punt.

I heard it again from Mike Moffatt on the Prof G Markets podcast. He is a Canadian entrepreneur and adviser to governments who worked in a startup in the food industry in Canada and spent more than a decade in the US. When in the food start up, it was easier to become a small supplier to the big US grocery chains than it was to the Canadian ones. The Canadians wanted to play it safe.

Prof G reckons the US attitude to business risk is genetic because it has been risk takers from Europe and then greater surrounds who came to America and built businesses and infrastructure that has led to the US’s economic success.

Irrespective of genetics and the level of risk taking, people hesitate to take risks because losses sting more than wins excite. We need to do more to build a culture where failure is learning, not punishment. Instead of finger-pointing, we need to ask: What assumptions were wrong? What information was missing?

If you scrutinise failures, do the same for successes. Reinforce good decision making, not just damage control.

For C-Suite Leaders: Encourage a decision making culture that values learning over fear of failure.

For Risk Leaders: Focus less on preventing a catastrophe and spend more time with execs on helping them to assess and take opportunities.