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Lynda Shaw

Neuroscience Professional Development Programmes


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The psychology of risk management in business


Thinking of taking a few risks? Read Dr Lynda Shaw's advice first. 

Psychologically, male and female leaders are programmed differently when it comes to risk-taking in business, but both are taking more calculated risks in 2014 following the battering the UK took in the last recession. Taking risks comes with its pros and cons – it will either help you gain or lose something of value. Whether it be to sell a million pounds worth of shares or something as simple as crossing the road, most of us have personalities within ourselves that can categorise us as risk-avoiders or risk takers in business. 

We should consider gender biases in risk-taking and be mindful of stereotypes as after all, we are not just products of chemicals and anatomy; age and culture - environmental factors also come into play. That said, the prefrontal cortex (PFC) which regulates emotional responses is larger in women. The amygdala is larger in men and is pivotal in emotions. One could argue therefore, that female leaders are more likely to control (PFC) risky behaviour (amygdala).

If we compare the way men and women take risks, male leaders are more likely to be concerned with hitting objectives whilst women leaders tend to be more conscious of the effects that risk will have on the people involved. It is understood that male risk taking tends to increase when under stress, whilst female risk taking decreases under stress. It could be argued that in a stressful business situation, men and women working together would make better risk-taking decisions than either gender alone.  

In times of recession, it is not unusual for leaders to be more risk-averse because they cannot afford to make the wrong decision. However, as the economy is stabilising and growing, we need to continue to approach risk with calculated confidence. By involving the broad areas of the brain with the whole process of calculated risk taking, it will generate creative thinking, problem solving and decision making.

Calculated risk should not be considered reckless. Risks to an international enterprise may be concerned with answering to their shareholders whilst a small start-up may have risks associated with taking their first office space. With any decision that is made by a leader there will always be an element of risk, as it demands confidence and belief in themselves to make the right choice. The outcome may not always be accurate, but it is important to recognise and learn from the mistakes and be open to possible changes in direction.

Risk taking tips

  • Show confidence. Don’t be a satisfied follower. Have the confidence to take charge, to think on your feet and to solve problems effectively. Don’t overanalyse as you can talk yourself out of anything. Follow your instincts and be bold. Think carefully about risky decisions but do not procrastinate once you have made your decision.
  • Don’t think you know it all. It is best to explore what risks work and what needs more planning to optimise the success level. Don’t think you have all the answers. Ask the experts and then make your own decisions.
  • Learn from risks. Lessons which are learnt when taking risks within the business and may lead you on an important new path. Learning from mistakes is an opportunity for growth.
  • Acknowledge multiple opportunities. Be focused on what you want to achieve from taking risks. If you zoom in on it too much you may miss opportunities. Zoom out and the opportunities will come into clearer view.
  • Review the outcome of the situation. After the decision has been implemented and all risk has been mitigated, evaluate the success of the outcome and how the risk-taking has affected the business.

A regular presenter, Dr Lynda Shaw is a registered chartered psychologist, neuroscientist, an Associate Fellow of the British Psychological Society, a Fellow of the Royal Society of Medicine, a Fellow of the Professional Speakers Association as well as an entrepreneur and author of adult and children’s books and a Forbes contributor

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Lynda Shaw


Read more from Lynda Shaw

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