In my experience, high-caliber athletes tend to be great risk managers for the simple reason that high-level sports tend to be an excellent training ground for the principles of risk management. Sports involves many of the types of assessments that risk managers need to make and resembles risk training in many ways. In addition, the decisions of both athletes and risk managers frequently need to be made in the context of VUCA:
Athletes, for instance, a tennis player, need to constantly make decisions between playing offense versus defense. A player who plays too conservatively will be beaten by a player who is willing to take more chances and play more aggressively. Conversely, a tennis player who always goes for broke on every shot will usually lose to a player who is more patient and willing to take more measured and calculated chances.
In risk management, a too conservative risk appetite will prevent the organization from taking advantage of opportunities, while an organization that throws caution to the wind in an effort to capture outlandish windfalls will also likely find ruin more frequently than success.
An athlete generally also has to consider different scales of time. If all energy is expended in the first set of a best of five matches, there may be little to no energy to complete the match. Likewise, a risk manager needs to balance the needs of the short term with the needs of the longer term. There may be times in which the risk management effort is turned up, and times when the risk management effort is turned down. If everything is treated as a crisis, then nothing is a crisis, and the risk management effort will be ineffective and wasted. An athlete needs to understand the changing context of the match, just as a risk manager must do.
An athlete needs to be continually learning and adjusting as the game progresses. Opponents likewise will be changing their tactics, and the changing conditions will also need to be adjusted for. It is rare that an athlete can play an entire match and be successful with just one strategy or tactic. Likewise, a risk manager needs to learn and adjust to the context. Risk management strategies that worked in the past, may not be as effective in the future. The changes in strategy and tactics for both the athlete as well as the risk manager may be subtle, or they may be drastic, but the reality is that the conditions and opponents and, yes, risks, will always be changing and adapting. The successful athlete, just like the successful risk manager, must likewise be constantly learning and adapting.
Perhaps the most important way that high-caliber athletes and risk managers are similar is that they have concrete objectives. The best athletes are always playing to win, while inferior athletes are frequently found out to be playing to a strategy of not losing. (The two strategies are not equivalent!)
Likewise, a high-caliber risk manager is functioning to achieve the objectives of their organization – which is very different from the objective of “not making mistakes” which is too frequently the objective of a mediocre risk manager. Great risk managers are in place to see that great positive objectives are achieved, just like great athletes want to win the tournament.
So, the next time you think of what it takes to be a great risk manager, think like a high-caliber athlete. Risk training can be a useful risk management tool and the source of your success.
Omer and Rick are authors of the book Risk Management for Non-Profit Organizations, published by Business Expert Press