7 Actions for Building a Healthy Culture of Risk

I grew up on a village farm in tropical South India. My cousins from the U.S. or Middle East loved to visit us on the farm but were often uncomfortable with our version of ‘fun’. Smoking various critters out of their holes or catching fish in the local river with electricity or dynamite was normal for us, but for these cousins it was too scary and risky. I never understood their reticence…it was just normal and fun for me.

We must avoid becoming immobilized by excessive risk aversion.

The family culture we are raised in has an undeniable impact on our perspective and behavior. Similarly, the culture you create in your organization significantly impacts the perspective and behavior of your teams towards risk.

Take western society as an example. I was recently out walking and found workers pulling out what to me was a perfectly beautiful playground. Talking to the workers I learned that the local authorities have deemed much of the play equipment, like climbing frames or spinning equipment, to be “too dangerous” and therefore need to be removed. These were things that our children used to play on just a few years ago!

Don’t get me wrong, I am not saying that we should throw out all safety laws but what I am saying is that we must avoid becoming immobilized by excessive risk aversion. Before the days of plastic playgrounds, rubber mats and safety rails, there were bumps, bruises and breaks that helped create a tough and adventurous generation who could overcome the cruelties of war, famine and global depression. How would the great pioneers and founding fathers of the western nations have ever built these nations to be beacons of light and hope if they did not have the freedom and willingness to take risks?

Culture is developed over time by intentional and repeated behavior. 

I fear for the future generations of western civilization. Human history has always been about the ‘survival of the fittest’, however now it seems we are transitioning into a new era of ‘survival of the safest.’ My fear extends to the future generations of pioneers and entrepreneurs because, even in this risk-averse era, to innovate and to take new ground, a healthy risk culture is necessary. Especially in the context of overcoming all the havoc created by Covid-19, playing it safe by following the old well-worn path may not lead us to success in a post Covid world!

Culture is developed over time by intentional and repeated behavior. So here are seven actions to help build a healthy risk culture in your organization:

1. Define Risk

By defining risk within your organization, you will create consistency and bring clarity to where the boundaries lie. It will set the bar right, pull back the ‘mavericks’, push the timid and create appetite for the right amount of risk that is appropriate for your industry.

2. Communicate and Equip

Inspirational communication and storytelling will help change attitudes, but you need to equip your people through consistent training to change behavior and develop a healthy culture.

3. Lead by Example

Most of us in leadership got to where we are by being willing to take risks! Starting out requires a relatively high level of risk but over time, as we get older and/or our organization gets larger, our appetite and tolerance for risk seems to diminish. We can unwittingly move away from the very things that made us successful. As leaders, we are to lead by example in all areas, including appropriate and continued risk taking.

4. Monitor and Measure Risk

Can you imagine driving a car without a speedometer and brake? Without appropriate systems and processes within your organization to monitor (like a speedometer) and control the risk (like a brake) you could be heading for a major crash! As a leader, you need to have timely risk information flow and ways to deal with the unexpected consequences and results.

Risk must continue to be wisely monitored because our organizations can be damaged by either extreme: too much risk can cause short-term damage, but too little risk can cause long-term damage!

5. Create a Risk Margin

Most of us create various margins in our schedules and budgets. Why not intentionally create a risk margin throughout your organization? For example, allow each department to have a percentage of their budget that is to be allocated for ‘risky’ projects. Allowing this margin assures everyone that a failure within this margin is not going to result in a negative impact on their overall performance. So, when you do performance assessments, the risk takers are not going to be unfairly penalised for taking a risk that could have been a win for the organization. This margin allows them to use their creativity; to innovate and do what they otherwise would not.

6. Opportunities to Fail Successfully

Most organizations create strategies to succeed, but if you want to create an effective culture of risk, you need to have an environment where successful failure is not ridiculed or mocked but celebrated (you also need to differentiate between successful failures vs foolish failures!). Remember the days when you were encouraging your child to walk or ride a bicycle? Allowing your team to fail successfully and learn from mistakes is a powerful leadership development process.

7. Reward Risk Taking

Most of us have reward and recognition programs for the high achievers. By celebrating and rewarding those who are taking significant (wise) risks that may not have succeeded, and encouraging them publicly, you will be nudging the timid ones forward and nurturing the risk culture in your organization.

Intentionally developing a healthy and balanced culture of risk within your organization should be part of every leader’s priority.

Jesus is a great example of building an incredible risk culture in his team. His recruitment strategy clearly shows us that he didn’t want anyone in his team who was risk averse. It was an all-in or nothing approach! Anyone who had an excuse and was not willing to leave everything at once and join his mission had no space in his team.

Throughout his ministry, Jesus continued to push his team because he knew the human tendency is to seek comfort and security. He created a culture where Peter could take the risk to get out of the boat and walk on water—at least a little bit—and then there was not shame, only teaching, with the ‘failure’.

Intentionally developing a healthy and balanced culture of risk within your organization should be part of every leader’s priority. But remember, risk culture is not going to happen by an email, a blog, or as an agenda item at your staff meeting. It will take intentionality, time and buy-in from top to bottom.

Reflection Questions

• How is the risk culture in your organization?
• Do you and your team have freedom to take wise risks and fail successfully?
• What changes do you need to make: 1) in your own thinking and, 2) in your organization to bring a balance between risk management and risk taking?