How Directors and CEOs Should Address Risk

Board-MembersA recent study revealed the top ten risks that board members and executive management is most concerned about in 2016.

The number one concern was a tie between regulatory changes/scrutiny and economic climate. The corporate world is full of risks that we can’t really control which often sends us into panic mode.

Let’s take a look at what fear does to the executive team and how we can address those effects in a way that reduces risk by making better decisions.

Board members and the executive team have to consider so many different risks coming from different angles that often times it can be overwhelming. When this happens, our brains go into fight or flight mode and begins releasing cortisol, a stress hormone that reduces cognitive ability.

When cortisol is produced on a continuous basis, the person becomes paranoid, closed minded, and unwilling to cooperate with others. This is obviously the worst possibility when addressing risk and challenges. So how do we work together when our basic human instinct is telling us to shut everyone out?

Open communication and emotional safety is the key to combatting our natural reaction to stress. These two techniques calm the brain and reduce the cortisol production.

We are, as humans, designed to thrive in safe environments.

Independence comes from having a secure bond with your team members. If I know you have my back, if I know that you will respond when I call, and I feel Important to you, I feel more confident, I feel stronger at whatever is coming to me.

The more secure and safe you are, the stronger and more autonomous you can be. To achieve open communication and emotional safety, you have to start with self-awareness.

Understanding your own emotions is step one. When you are in a stressful situation or you are assessing risk, ask yourself “What is happening with me? What am I experiencing? Am I feeling agitated or frustrated? Am I shutting down or becoming more combative?” – try to step back from the situations and think of what you would tell someone to do in a similar situation.  A little perspective will make a huge difference.

Step two is to be able to create emotional safety for your executive team and fellow board directors. Ask your CEO, directors, and team to share their opinions on different risks or upcoming challenges. When people feel like their view is important, they are more likely to maintain open communication because they feel safe and appreciated.

One way to increase emotional safety in the boardroom is remain accessible, responsive and engaged. Accessible means remaining open to other people’s ideas even though you are feeling stressed or concerned.

Responsive means paying attention to other’s emotional cues, helping them to deal with their emotions by staying empathetic, to really understand the concern and validate whatever fears or worry they are experiencing. Engaged means staying emotionally present by providing helpful feedback to the ideas, staying calm and actively present during the decision-making process.

The problem with risk is that is nearly impossible to control.

Boards can reduce the risk of their company by staying united and connected. There are so many factors that are out of their scope of control that affect risk (global economies, industry regulations, technology, etc.).

When board members are able to learn a new way to react to adversity and challenging situations, they will be able to turn to each other for help in times of stress. When the board is emotionally connected, it can maintain open communication, depend on each other, and collectively address any risk or challenges with the best outcome possible.

If you would like to learn more about creating a safe environment for your board, please contact us at info@levelfiveexecutive.com.

2017-07-09T16:37:20+00:00 April 11th, 2016|Board/Team Dynamics, Leadership|

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