Risky business – know how your mindset affects your assessment of risk

How does your mindset influence your approach to risk assessment? Check out this article to see how risk averse you are and why this affects how you tackle challenges in your business.

Your values, beliefs and attitudes construct a view of the world and your place in it. This drives your decision-making and combines into what you describe as your mindset. You might assume that risk management is a logical activity. And, of course, some of it is but you ignore the influence of your values and emotions at your peril.

Leaders growing their businesses perceive and assess risk in a variety of ways – even when they are facing the same risk.
Two things stand out here:

  • how you perceive the scale of the upside or downside, and
  • your assessment of whether you can live with the downside.

Two mindsets seem to emerge – fixed and growth. Most of you will fluctuate somewhere along the continuum between the two, rather than be anchored at either end.

If you lean towards a fixed mindset, it suggests a fear of failure. A reluctance to change will therefore push you to resist and over-emphasise what is a risk and its downside. You will also doubt your ability to cope with any negative consequences, as they strike right at the heart of your need to get it right.

A more growth-oriented mindset embraces challenge. Risk is not to be feared and you can cope with failure. Setbacks are not devastating but used to reflect and redefine the next stage of action.

So are you a worrier or a warrior? Or are you just growing into your next challenge? We’d be interested to hear your take on whether you have a fixed or a growth-oriented mindset and how this affects your business.

Thanks to Ann Rennie and Carol Dweck for inspiration for this post.