“The biggest risk is not taking any risk.”
— Mark Zuckerberg
Chairman, CEO and co-founder of Facebook
Companies cannot forgo beneficial opportunities. However, we find it easy to forget that risk and opportunity are a duality and companies need to consider both sides. They could lose a substantial sum of money and damage their reputation if they fail to identify risk and avert it in time. And yet, risk-taking is one of the essential attributes of a successful organization.
But how can you avoid risk or take it if you’re on blinders? Diversity is a commercial imperative to provide organizations with a peripheral vision. Diverse teams benefit from connections to a wider network and better decision-making. The diversity in thinking, experience and knowledge all help to expand our views on risks and opportunities. With a mixture of men and women at the helm, companies are better prepared for all eventualities.
Curiously, though, do men and women take risk differently in business? How can firms harness their differences for more effective assessment of risks and opportunities?
Grant Thornton’s Women in Business study in 2017, which surveyed 5,500 male and female business leaders all over the world, shows that men and women rank risk fairly similarly.
Economic change tops the list for both sexes. This is followed by competitor activity, political change and legal/regulatory change. Media activity, social change, technological change and environment change are seen as areas of lower risk. Hence, despite the common perception that women are more risk-adverse than men, the findings dissuade a black-and-white analysis.
The individuals interviewed used such terms as “risk-aware,” “diligent,” and “diligent-driven” to describe the qualities that women bring into the team. They consider context and nuance to fully comprehend the implications. And though it may take longer for women to come to a conclusion about whether or not something constitutes risk, they are equally open to taking the risk.
The Grant Thornton survey showed that women react to risk differently from men. Women tend to approach risk and opportunity in a holistic, detail-driven way. Women require more analysis compared with their male counterparts because they have a greater need for a balanced and complete view before taking action. Some tend to view these traits negatively, especially those who believe that risk requires quick thinking and swift action. However, in today’s more erratic and uncertain environment, large strategic risks affecting the entire business are ever evolving. Here, women can provide checks and balances to encourage the right risks and opportunities to be pursued. With women in leadership roles, men are deterred from getting caught up in quick thinking. A mixed gender team, thus, brings a broader range of input, help and consideration to bear on huge and strategic issues.
Companies must, therefore, help women to learn to tackle risk and spot opportunities. The Grant Thornton study forwards a number of suggestions.
First, it recommends that companies build mixed gender teams for effective risk management. Dynamic resilient companies will navigate the extremes with a calmer, more balanced assessment of the risks and rewards.
Second, it suggests that companies provide women with leadership opportunities to make them familiar with risk. Experience and leadership bring confidence and familiarity. Companies should not rely solely on technical training, but provide young women with on-the-job experiences, too; exposing them to the process of risk management and – where appropriate – involving them. The more familiar women are with considering risk, the more capable and confident they become.
The study also encourages companies to create a culture where taking calculated risk is part of a successful business strategy, not something to be avoided. Individuals and teams need to feel supported, not penalized, when making decisions about the risks their companies encounter. Hence, companies need to provide training and allow more room for women to experiment and “fail well.” This can be done by establishing a growth mindset where individuals and collective teams of decision-makers can learn from their mistakes and actively seek out new challenges.
Companies are persuaded to look at risk and opportunity as different sides of the same coin. They should avoid referring to risk exclusively as a threat but consider them as opportunities for growth. One idea that surfaced through the research was to allow mixed leadership teams to contribute ideas and observations about threats and opportunities anonymously to risk registers ahead of discussions. These submissions may then be considered without bias and encourage participation that will maximize the benefits of diversity and welcome a wider spectrum of views.
Finally, the study suggests that companies engage in more collaborative risk management processes. Companies should facilitate the involvement of women, who are often positioned in finance and HR departments, in wider discussions around risk as business opportunity and threat. This way, women will have greater exposure to this increasingly important management and strategic role and, thus, boost their potential for career growth.
When the team is balanced, more debate happens, more voices are heard, and more facts and perspectives are incorporated. This ultimately leads to more comprehensive ways for companies to succeed and thrive in this risky erratic world.
Maria Victoria Espano is the chair and CEO of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory and outsourcing firms in the Philippines, with 20 partners and over 800 staff members. We’d like to hear from you! Tweet us: @PAGrantThornton, like us on Facebook: P&A Grant Thornton, and email your comments to firstname.lastname@example.org or email@example.com. For more information, visit our Website: www.grantthornton.com.ph.