Why Executives Should Replace Skepticism with a Risk Management Mindset

A lot of the time (but not always!), skepticism is construed as managing risk.

Personally, I believe that skepticism has become a mindset that has gained major footing in American culture. It’s like a screen that colors our daily sentiment.  We are weighed down by it, and a lot of the time will approach a new situation with a level of negative skepticism as a defence mechanism so to avoid meaningful change.

But I think what’s key to note here is that it’s fine to be skeptical on a topic. Friedrich Nietzsche once said, “Great intellects are skeptical,”.  However, it can be detrimental to be a skeptical person. This mindset will only hold someone back from their potential, their ability to grow, and their ability to be their best self.

Whilst middle managers may lean ever so slightly towards the skepticism end of the risk management scale while they develop broader situational development, executives should be in risk management mode to best lead the organization and their teams.

This is about incorporating a healthy dose of risk management when making decisions and strategizing to push the company to a new level. It’s about understanding how to navigate compliance and regulatory, protecting company assets, understanding economic outcomes, and communicating plausible scenarios. It’s not about apprehension to change, distrust in the new perspectives, reluctance to evaluate new opportunities, and being suspicious of the unknown. Managing risk versus skepticism is often the difference in making inclusive decisions and creating a culture for broad, needed change.

If we were to apply this to a chief financial officer’s (CFO) role, being seen as skeptical will mean that the most creative and innovative ideas will go around them. It is likely that they won’t be brought into the decision-making process if their lens is always a skeptical and pessimistic one; they will be pushed away from the decision table. To be a good partner to these potential innovations, they have to have a healthy sense of risk management. This means covering potential blind spots without stunting innovative growth opportunities.

However, just like being too far on the skeptical side of this scale can hold you back, being too far on the optimistic side can also have drawbacks – most notably, making decisions without considering the risks at all.

Finding a balance between these two will make for an executive who is managing risk while also taking risks, as without any risk there is no reward.

If you would like to discuss how we can help coach an effective risk management strategy to your executive team, please get in touch with me at ken.merritt@orgshakers.com