Building a Risk-Taking Culture

The Leadership Test Kitchen is a newsletter where I share the ingredients behind leading and growing successful companies. Some editions feature practical frameworks from CEOs who’ve mastered challenges in strategy, culture, and growth. Others share the lessons I’ve learned firsthand as a CEO, or insights I’ve gained from my work with other executives.

Until last year, I was afraid of heights. In 2025, I decided to repaint our house, including the 18-foot ceilings. What I discovered is that repeated practice on a very high ladder breaks down your resistance faster than any pep talk ever could. Step by step, rung by rung, the fear recedes.

Building a risk-taking culture works the same way. Over five years, I assessed risks for some of the largest transformations at some of the largest organizations. Then I got to test my own instincts as president and CEO.

Here is what I learned:

Risk Is a Perception Game

I have built, leveraged, and deployed several risk management methodologies, working through the standard levers of business risk: brand, legal, financial, market, people, technology, and regulatory. These tools are all great, and today’s risk management practitioner can map out what might be coming, how likely it is, how fast it will arrive, and how much damage it could do. But beyond the frameworks are the leaders who make up the organization – and this is where the biggest limiter and accelerator of a risk-taking culture lives.

The real exposure is political risk. And by political risk, I don't mean geopolitics or office gossip. I mean the very real exposure that comes with how others perceive your judgment, your credibility, and your track record. How will I be viewed if this goes wrong? How much influence do I stand to lose? How much does my team still trust me after the last call I made? It is the risk of reputation, perception, and organizational standing. And, more than any methodology I have ever used, credibility risk determines how far an organization is actually willing to go.

Four Ways to Get Comfortable with the Chaos

Given that political risk is the biggest influencer of decision-making, here is how to break down the resistance. These are not sequential steps. Think of them as parallel levers you pull together.

1. Name the Fear to Determine Your Risk Tolerance

I think of risk tolerance as the maximum amount of chaos you are willing to accept in any move you make. It starts by defining a continuum between “whopping success” and “absolute failure” – in concrete business terms: revenue, profit, customers, employees, etc. The art is in honestly identifying where your line is, and then asking the harder question: what does it mean to me, personally, if this plays out at the worst end? What do I lose? What does it cost me to be wrong?

Sharing this with your team can feel vulnerable. But it also creates a level of clarity that is very hard to achieve any other way. When people know what you are actually willing to risk, and why, the whole conversation changes.

2. Rehearse the Crisis Before It Happens

The more clearly you can define and practice how you will respond when things go sideways, the more confident you become in your ability to handle them. And confidence is what allows you to move that maximum chaos line further out, giving you more room to innovate and experiment. 

For your leadership culture, this builds something equally important: collective confidence. When your team has watched you navigate difficulty, even in a simulation, they can think and lead bigger. Crisis management is not just a contingency plan. It is a competitive advantage.

3. Define the Smoke Detectors, Not Just the Fire Alarms 

This is standard in any risk framework, and I will not overcomplicate it. My only advice is to simplify ruthlessly. Fewer metrics. Fewer triggers. Look for patterns rather than one-off anomalies. The simpler the KPIs and triggers, the more likely people are to actually use them.

4. Embrace and Reward Risk Taking

The last piece of the puzzle. Your team mirrors your behavior. If you reward risk-taking, they will take more risks and reward that behavior in their own teams. If you punish risk-taking, you will become brittle as an organization, one that waits for permission before it moves. 

My Own Leadership Adventures in Risk Taking

The biggest risks I’ve taken that paid off were: betting on an unproven leader for a major leadership role, allowing a practice to grow without constraint, and launching a new offering before the market fully confirmed the need. In each case, what I got right was naming the fear, defining the KPIs, and embracing and rewarding risk-taking. 

The biggest risks I’ve taken that did not work: reorganizing a company and a leadership team, and allowing over-hiring in dynamic market conditions. I was completely comfortable with the personal and political stakes. What I underestimated was my proximity to the work, the speed at which I needed to adjust, and my ability to negotiate different outcomes with key stakeholders. Looking back, what I got wrong was naming the fear honestly and building the smoke detectors early enough. And if I am being completely candid, I got too confident in my ability to lead through a crisis. Too comfortable on the ladder.

Where Are You on the Ladder?

Every leader I work with has a ceiling they have been reluctant to paint. Sometimes it is a market bet they keep deferring. Sometimes it is a leadership move they know needs to happen. Sometimes it is a cultural shift they can see clearly but have not named out loud yet.

What is the next rung you have been avoiding? 

A Culinary Note

Building a risk-taking culture reminds me of learning to cook—which, in my case, involved a memorable number of disasters. I have burned sauces, over-seasoned dishes, and the list goes on. What I learned is that none of it was wasted. Every bad meal taught me something about timing, about heat, about when to intervene and when to leave things alone. My family and guests did not punish me for the mistakes; they just kept giving me another shot. That is the culture I try to build as a leader. The teams that get good are the ones that were allowed to keep cooking.

Originally published on LinkedIn on March 17, 2026

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