Get Your Board Comfortable With Taking Calculated Risks

Because of their fiduciary responsibilities to their associations, board members can often be overly cautious. But in the current environment, experts say, boards must be willing to take calculated risks to help their organizations thrive.

“What our associations are operating in now is what I refer to as the ‘discontinuous next,’ which is an ongoing period of uncertainty, volatility, and risk that’s not going away,” said Jeff De Cagna, FASAE, executive advisor for Foresight First, LLC. “Every decision, therefore, is higher stakes, and every board needs to change its perspective on risk from the idea that something is either risky or not, but rather to say that every decision involves risk.”

More importantly, today’s climate of rapid change means a risk-averse board often stifles organizational growth and puts an association at a disadvantage. “When boards are slow to react, they really miss opportunities,” said Barbara Arango, CAE, executive director of the Illinois Parks and Recreation Association.

That’s why CEOs must encourage their boards to adapt quickly to the changing landscape and embrace risks.

Leaning Into Risk

De Cagna said the first step for boards looking to take calculated risks that improve their association’s long-term future is to understand the risk might not pay off.

“We often hear people say, ‘Failure is not an option,’” he said. “Failure is always on the table, and until we get comfortable with that, we are always going to struggle with these kinds of choices.”

Allowing failure as a possibility widens a board’s view so it considers all its options, rather than immediately disregarding suggestions it thinks could fail. Once all the options are presented, De Cagna says, boards should follow a four-step process: understanding, or “making sense of,” the issue of concern; “making meaning” of it—figuring out how it applies to your members or industry; deciding whether and how to move forward; and evaluating the outcome.

“That process of sense-making, meaning-making, decision-making, it’s circular,” De Cagna said. “How that system works together is it enables the decision-making process to not avoid risk—because those things really can’t be avoided—but to make sure we are doing our level best to come out with the right outcomes rather than outcomes that are ill-considered and ultimately detrimental to the organization.”