Part of being a leader is taking calculated risks. The parable of the talents that Jesus tells in Matthew 25 is a story of risk-taking. Perhaps the biggest risk of all is never taking any risks. Ron Edmondson shares 7 high costs of attempting to eliminate risk.
Originally posted by Ron Edmondson
Every leader attempts to limit risk as much as possible when making decisions. We don’t want to jeopardize the organization – ultimately the people – we are trying to lead, so we attempt to have good systems and procedures, boundaries in place, adequate resources, and even contingency or emergency plans. But there are some high costs when we attempt to eliminate all organizational risk.
I’ve seen leaders confuse an attempt to limit risk with attempting to eliminate ALL risk. There is a big difference. I’m not sure we can ever fail-proof anything , so it’s a futile attempt at best to try to get rid of risk completely.
When we are more rule-centric or risk-adverse than we are willing to “take a chance” or “try something new”, our opportunity costs exceed our potential savings from attempting to eliminate all risks. Every successful organization embraces a certain amount of risk. And there are some high costs involved when a leader who is overly cautious.
Here are 7 high costs of attempting to eliminate risk:
Personally and corporately, without a certain amount of risk there is no potential for growth. Growth happens in environments where the potential to fail is prevalent, accepted, and not scorned. People are not afraid to take chances.
Dreams are made of the seemingly impossible. The bigger the dream the greater the risk. Healthy teams and organizations have big, lofty dreams pulling them forward.
Life is a constant risk. If a leader has as a goal an attempt to eliminate it they are essentially playing tricks with mirrors and fancy lights. They’ve created an unachievable expectation for people who follow.
“Playing it safe” may make more sense on paper. It may even feel comfortable, but often when resources are stretched is when the greatest growth potential occurs. Ask the question – “What would we do if we were forced to change and there was no money available?” It’s amazing how creative people can become.
The time you invest trying to eliminate risk could be used to leverage risk for a greater gain. All of us only have so much time, so leaders must be diligent stewards of it.
Expensive opportunity loss.
Whenever you choose not to do something because of the risk involved, there is always a loss associated. The organization will miss out somewhere on something by not moving forward soon enough. The greatest discoveries often involve people who are willing to assume the greatest risks.
The fact is risk fuels momentum. There is something inside of most of us – especially the entrepreneurial leader types – who thrive on achieving those things which seem impossible. When the chance of failure is high so are the components which fuels momentum.
Leader, you can never fully eliminate risk and this is one of the hard parts of leading. The time you spend attempting to do so will take precious time from doing other things, which probably can reap higher reward. Risk is a reality to be managed not a problem to be avoided.
(This is true, of course, when leading in the church. Perhaps more so, because we are to always be faith-driven. Faith always, by definition, deals with a level of the unknown.)