Volume 18 Number 1 - January 7, 2020


A colleague of mine recently flew to Doha for “weisure,” a combination of work and leisure. Qatar is a country I have yet to visit, and I intend to change that fact within the next few years. I eagerly await her insights from three weeks in that city and country.

Given the recent US-ordered assassination of Qatar neighbor Iran’s second in command, should she be afraid?  Aware, yes. Afraid, no.

When I travel internationally I am often asked: “But aren’t you afraid?”  No, I am not.

Risk is different from fear. Understanding fear may help you assess differing “risk quotients” impacting your business.

Should you refuse new orders from new customers because of the risk? There is a chance your team will fail somewhere in the process of filling that order.  Should your decision be based on fear of that potential failure?

Business is a risk.  All aspects of business contain risk. Your strategy defines whether or not that customer or that order is within your risk profile. Or within your strategic focus.

“We don’t want to be in the automotive supply chain” is often a strategic decision based on risk management. While the potential large revenue impact of selling into automotive can be alluring, you may see it as not worth the potential downside. That decision is not based on fear, but on risk tolerance and risk management. Or strategic intent to focus elsewhere.

As a leader you must determine the acceptable levels of risk for your business and how you will manage that risk.

You wince when employees don’t provide useful information. Why don’t they? Often because an individual is afraid of losing his job. Typically not a rational fear, but it nonetheless puts actions you see as important--providing input--outside his risk profile, all the way into his emotion of fear.

That fear is based on not trusting you.  When you say you want input, you are heard as saying you want input that makes you look good or that agrees with what you want to hear. Regardless of which words you use, until the trust problem is resolved you won’t receive the information you want.

Similarly, when employees won’t make decisions on their own that you believe they should, a conversation about perceived risk is in order. Are they afraid of being second guessed and penalized, or is their risk tolerance simply lower than yours? Those are two very different problems.

Fear impacting employee decisions and actions is resolved through building mutual trust. Risk management is a process of quantifying potential upsides and downsides and consideration of probability and impact of those outcomes.

A COO I know was so confident in the upside of a new product introduction that he refused to allow a meaningful risk assessment.  Sadly, that was a bad decision. The organization was not prepared with a plan to enact when the worst scenario occurred.

Confidence can be misplaced, as can be lack of confidence.

Fear of a bad decision is different from the risk of a bad decision.

“What’s the worst that can happen?” should not be a casual joke, but rather a conversation. Help employees replace fear with the ability to answer that question, along with its inverse and the probability of stages along the continuum. Build their understanding of the company’s risk tolerance, cumulative risk, and the importance of an effective Plan B with identified triggers to initiate it.

Intelligent risk management is cognitive.  Fear is emotional.  Both have their place. But not in your business. 

As Dr. Deming said: “Drive out fear, so that everyone may work effectively for the company.” He didn’t say drive out risk, as that is impossible.  Manage risk?  That is not only possible but necessary.

The Starting Pistol

Isaac Asimov:
"Education is not something you can finish."

The Tape

Rebecca Morgan:
"...but day by day we continue the process."

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