Leaders have a constant companion: risk. Obviously, there are risks with every decision you make. Of course the truth is that there are risks with decisions you don’t make, too. Risk is part of making a decision. And if there is one thing Leaders must do, it is to decide.

Minimizing risk is a strategy many leaders use in their leadership. This strategy has its good points, not the least of which is that it usually minimizes risk! There are downsides, too, however. Sometimes when you minimize the risk, you also minimize or eliminate the reward.

So how do you decide what to risk, how to risk and when to risk? The answer, of course, depends on the situation and the risk. In some cases, there is no choice but to risk.

Your natural personality traits create reactions that dictate how you respond to risk. While the emotional reaction is automatic, it doesn’t mean it can’t be managed or changed. It’s just that this takes energy to overcome if you aren’t naturally predisposed to risk. But before you can expend this energy, you have to know how you react in the first place.

Pity and Other Parties Leaders Should Avoid

A relatively new coaching client of mine is also new at being a CEO. Recently, she called up lamenting about what “a terrible, horrendous mistake” she made the day before. When I asked her to describe the error, it turned out to be a simple mistake for which she had already cleared up the consequences. I asked her if she could think of anything more horrendous that she could have done, and she listed several things.

“So, who is perceiving this as horrendous other than you? “I asked.

“Stop interrupting my pity party!” she said, as laughter exploded.

My client has a pattern of high worry and high rebound time. She knows it and is working on it. However, we all know that if you aren’t failing, you aren’t trying hard enough or risking enough.

Don’t Follow This Leader!

Unlike my client, I neither stress about risk nor take long to rebound from the consequences of stress. Sometimes this is great and leads to great things; Sometimes it leads to stupid decisions.

I was skiing with friends many decades ago on one of Aspen’s slopes. It was a spectacular day, and the sun was warm. We were playing Follow the Leader. I was an average skier, at best, and was last in line behind the other five who had taken their turns being the leader.

“Your turn, Judy!” my friend yelled when we got off the chair lift.

I hesitated. Then shrugging my shoulders, I took off straight downhill. I do not ski well enough to go straight down anything, but I was young, impulsive and not wanting to be viewed as the only coward among the others. I put one pole in the air and looked back: five poles in the air. Then, I lifted the other pole, and finally, both poles. The same pattern of imitation behind me.

Now we were gaining speed. At some point, something took over other than my reasoning brain. I bent over and lifted one ski up and out—as in a one-legged swan dive—and held it for several seconds. In spite of the wind in my ears, I heard audible gasps behind me and one “Jesus Christ, girl!”

I managed to put the ski back down on the ground and zigzagged to the bottom where I waited breathlessly for my buddies. One by one, they joined me with eyes wide and mouths open.

“Now that’s chutzpah,” one of the guys said.

“No, that’s just plain stupid,” I said. “I have no idea what came over me. I’m lucky to be alive!” We headed back to the lodge, and my stunt was the topic of the entire bar. I’m pretty sure I had an excess of hot buttered rum that night.

What did come over me? The headiness of being the leader? The fear of being called a coward? Most likely it was just sheer raw impulse propelled by an excess of adrenaline, impulsive youth and brainlessness. However, for those fleeting seconds, I felt like I was almost flying down the hill and were some of the most exhilarating moments of my life!

Getting Carried Away with Risk

Think back on your career. Have you ever done something totally impulsive, later realizing that it was foolish, reckless or even dangerous? We all have to one degree or another but most likely with both feet on the ground (and not speeding headlong down a hill). But we’ve also done impulsive things that resulted in small or large victories. Some risk is good; stupid risk is not.

What are the ingredients of stupid risk?

  • Clear dangers involved for which you are not trained or experienced
  • Unknown dangers that you have not assessed
  • Warning signs that you ignore
  • Serious risks that clearly outweigh the benefits
  • Ego signals that are shouting about the ill-advised reasons for taking the action

Your natural personality traits contribute to how you respond to risk. It’s important to have an understanding of why you do what you do as a leader. This understanding makes facing risk easier for those who have problems with it and adds caution to those who don’t have enough of it on their own. A tool that I find highly effective in helping leaders better understand their natural reactions to risk–and many other challenges on the job–is the Workplace Big 5 Profile.

Risk is just part and parcel of the leader’s responsibility; you can virtually guarantee that you will need to face it as a leader. The trick is knowing your natural response based on personality traits and managing it. Then, you can do your job to the best of your ability.

How does your personality respond to risk? Is it time to find out?