To explore risk-taking strategies, Retreat Reinvent Recharge’s Who What How (TM) model provides a balanced approach to evaluating and taking risks. When contemplating an opportunity, it is helpful to consider WHAT the risk entails, HOW to effectively take the risk, and WHO one needs to be to do so. Underlying these three elements is WHY? Why is the risk-relevant and worthwhile to consider in the first place?
We begin with WHAT
People may find themselves on one of two ends of the risk-taking spectrum: avoidant or impulsive – neither of which are helpful when navigating difficult, risk-oriented decisions. Creating mental space to analyze an opportunity and weigh its costs and benefits allows for a more successful decision-making process.
To analyze whether an opportunity is worth taking, the following Risk Assessment Equation (TM) helps to quantify an abstract thinking process. To use this equation, rate each category on both arrows below using a 1- 10 scale (1 = low level, 10 = high level). After each category is rated, tally the total scores for the green and black arrows.
Now create a ratio with the total scores by placing the green total on top and the black total on the bottom. If the ratio is greater than one, seriously consider pursuing the opportunity. If the ratio is less than one, pause for further reflection and exploration.
HOW do you position yourself for effective risks?
Deciding whether a risk is worth taking is only part of the challenge. Having clarity around an approach is just as critical.
The authors of The Confidence Code (2014) share a tactic used by German Chancellor Angela Merkel and President of the European Central Bank, Christine LaGarde. Both of these successful women diligently invest in preparation. LaGarde says, “When we work on a particular matter, we will work the file inside, outside, sideways, backwards, historically, genetically and geographically. We want to be completely on top of everything, and we want to understand it all, and we don’t want to be fooled by somebody else.”
While LaGarde admits the habit of preparing and rehearsing takes time, it arms her for high stake situations when her confidence might waver. As women position themselves to take a risk, they benefit by asking “How can I thoroughly prepare for the situation?” A second strategy involves engaging a sponsor or mentor and building intentional networks. An allied relationship offers insights to manage risk including: an understanding of corporate cultures and hidden norms, strategies for navigating internal politics, revelation of limiting blind spots, and finally, good, old-fashion encouragement.
A tight inner network can also help women take professional risks for advancement. According to research in 2019 from the Kellogg School of Management, successful women tend to have a large, broad network in addition to a closer circle of female allies who provide “’private information,’ which may include insider tips about a company’s leadership culture and politics, or hints about how to make an impression in a male-dominated industry.”
A third strategy focuses on managing failure. Every risk carries the possibility of failure. Dr. Martin Seligman’s research on failure provides concrete steps to manage it. His years of study show that when failure is viewed as temporary, local, and changeable, we remain more optimistic, and in turn are less limited by fear of failure.
By temporary, he means that the perception of failure is limited within a period of time. I might have failed today, but that does not mean I will be a failure for life. By local, he means that the perception of the failure is limited in scope. I might have failed at brokering a significant deal for my company, but that does not mean I’m a failure at managing my division. And by changeable, he means that with effort a failure can be transformed, and a new outcome is possible.
If I failed and try again with new strategies and resources, there is possibility for a different outcome. When women have a strong framework for moving through failures, they build resiliency – a significant asset for risk-taking