17th February 2020

‘RQ’ and the Risk-Intelligent Leader

“Life doesn’t always present you with the perfect opportunity at the perfect time. Opportunities come when you least expect them, or when you’re not ready for them. Rarely are opportunities presented to you in the perfect way, in a nice little box with a yellow bow on top. … Opportunities, the good ones, they’re messy and confusing and hard to recognize. They’re risky. They challenge you.” Susan Wojcicki, CEO of YouTube.

Risk-Intelligent Leaders are defined by our experts as ‘intellectually curious individuals with an innovative, experimental and visionary approach. They are creative, collaborative and good listeners, focused on getting stuff done today whilst looking ahead to the future. They have an appetite for change and disruption without being rash or careless. And, most importantly, they have very high levels of emotional intelligence.’

You could argue that these are traits of all effective leaders. Don’t we want them all to be forward-thinking visionaries? Of course. However, there’s a key difference between the Risk-Intelligent Leader and other leaders, and that is their attitude to risk.

Horst Simon explains “Risk-intelligent leaders understand on a deep level the higher the risk, the higher the reward. And they understand the need to take the organisation with them if they are to exploit risk successfully.”

Adding to this point, Roger Baker makes an important distinction, “Risk-Intelligent Leaders can inspire change, identify and exploit opportunities but also be agile enough to identify when to pull the plug, fast.” Certainly, it’s not about unfettered risk-taking.

Our experts agree that it’s a myth that leaders who take risks are uncontrolled and lack attention to detail – it’s in fact the opposite. Pyke explains, “Those engaged with high risk activities are often incredibly thorough and controlled about how they engage – the downside is capped and they get out if things go wrong.”

So, we’re not just talking about risk-taking, we’re talking about risk-intelligence, or ‘RQ’ if you like – RQ being the ability to make well-informed, risk-based decisions as well as taking calculated risks for the benefit of the business.

So is RQ a pre-requisite for today’s successful leaders? Madsen would certainly support this view: “All effective leaders need to be risk-intelligent. This trait is essential to drive an organisation forward and make them competitive. Using risk is a key way that organisations advance.”

The flip-side

But what about those leaders who might be reading this, worrying about exposing their businesses to unnecessary risk? Isn’t it better just to be risk averse? To play it safe, just in case?

Our commentators would strongly disagree. As Pete Madsen explains, risk averse leaders actually expose their organisations to risk. He says that they simultaneously refuse to take the next progressive step whilst still expecting that things will continue in the same way. “Digital, and other, disruption has illustrated that this is folly.”

Bradley illustrates, “Risk averse leaders have ground businesses to a halt, and that cannot continue to happen. My favourite quote on risk is ‘Safe is risky. Risky is safe.’ It says it all.”

She continues, “The role of the Risk-Intelligent Leader is to drive the right conversations about risk. To develop a culture where taking risks is acceptable. To get the right risk levels (e.g. identify the percentage of a portfolio where they can take bigger chances or leverage whitespace opportunities). To celebrate learning from failure as much as learning from success.”

Ambitious designs, for sure. But it’s clear from our experts that organisations that have Risk-Intelligent Leaders are those most likely to survive, and that risk-intelligence is a pre-requisite for any ambitious, successful, modern leader.

The next chapter (Risk-Intelligence: How successful leaders thrive in an uncertain world) will look at how Risk-Intelligent Leaders are using risk today to drive performance and to outperform in our constantly changing and uncertain world.

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