Diversity, transparency, empathy.
When organizations welcome these qualities while maintaining structure and stability, they’re ahead of the game.
It is often difficult to find the right balance between an aggressive approach and a passive one when managing a business. In this article, I will describe the 5 types of risk, the 5 risk roles of executive leaders, and how these apply to balancing the Yin and Yang of Management.
What are the 5 Varieties of Risk?
Risk awareness involves recognizing the obvious: external threats (fire, bombs, hackers) and internal threats (waste, loss, and fraud) as well as strategic risks, which I define as “vulnerabilities and untapped opportunities that affect an organization’s ability to reach goals.”
The 5 types of strategic risks include:
- Governance: Controlling, Planning, and Monitoring
- Operational: Inefficiency and Waste Identification
- Competitive: Customer and Market Drivers
- Financial: Revenue Generation and Cost Control
- Reputational: Public and Customer Perception, and Employee Engagement
Of these main categories, I believe the most difficult to self-evaluate is Governance. Hidden threats that stem from leadership blind spots and biases have a major impact on strategic decision-making.
Unlike the other types (internal processes, market drivers, revenue, and customer perception), the Governance risks are especially critical. No organization can function without meticulous planning, control measures, and monitoring of vulnerabilities.
Risk Roles of Leaders
As an executive leader, you wear a lot of hats. The Governance role can be broken down into 5 Risk Roles of Executive Leaders. These include:
- Planner: Determine strategic goals; Recognize blind spots
- Director: Accurately gauge problems; Move projects forward
- Organizer: Create high-yield systems; Design effective processes
- Staffer: Identify work requirements; Select, train, and retain people
- Controller: Establish boundaries; Regulate and measure risks
Risk Roles in Strategic Planning
Each of these 5 Risk Roles is also related to the Strategic Planning Framework:
- Planning relates to Vision & Mission and Administration
- Directing relates to Strategic Objectives
- Organizing relates to Policies
- Staffing relates to Standards & Guidelines
- Controlling relates to Processes and Procedures
My previous post on Yin and Yang Approaches to Management noted the difference between the Collaborative Yin style of management (which is consultative and relaxed), and the Hierarchical Yang style (which is assertive and dominant).
Putting it All Together: Yin and Yang as Seen In the 5 Risk Roles
Below, I provide a side-by-side comparison of the Yin (Collaborative) and Yang (Hierarchical) styles for each of the 5 Risk Roles of effective leaders. I also include corresponding levels from the Strategic Planning Framework mentioned above.
Risk Role: Planner
Task: Planning
Strategic Plan Level: Vision & Mission, Administration
Goals:
- Determine strategic goals
- Recognize blind spots
| Collaborative Management (Yin) | Hierarchical Management (Yang) |
|---|---|
| Staff are involved in creating goals | Leadership team sets goals & plans |
| All team members collaborate & provide ideas on how to reach objectives | Leaders decide how to attain goals |
Risk Role: Director
Task: Directing
Strategic Plan Level: Strategic Objectives
Goals:
- Accurately gauge problems
- Move projects forward
| Collaborative Management (Yin) | Hierarchical Management (Yang) |
|---|---|
| Influence comes by collaboration from each member of the team | Influence comes from position of authority |
| Facilitate team brainstorming to discover solutions | Decide and deliver solutions |
Risk Role: Organizer
Task: Organizing
Strategic Plan Level: Policies
Goals:
- Create high-yield systems
- Design effective processes
| Collaborative Management (Yin) | Hierarchical Management (Yang) |
|---|---|
| Lead by example | Responsibility is assigned (“do as I say”) |
| Enable team to allocate time & resources as they deem necessary | Allocate time and resources only when proven necessary |
Risk Role: Staffer
Task: Staffing
Strategic Plan Level: Standards and Guidelines
Goals:
- Identify work requirements
- Select, train, and retain people
| Collaborative Management (Yin) | Hierarchical Management (Yang) |
|---|---|
| Allow roles & duties to evolve and fluctuate organically | Adhere to specific roles & responsibilities |
| Provide immediate & continuous feedback | Executives review performance annually |
Risk Role: Controller
Task: Controlling
Strategic Plan Level: Processes
Goals:
- Establish boundaries
- Regulate and measure risks
| Collaborative Management (Yin) | Hierarchical Management (Yang) |
|---|---|
| Openly share information | Monitor & maintain ownership of information |
| Encourage innovation; discover root causes continuously | Make corrections as problems occur |
Final Thoughts
As with anything, extremes are harmful. We need both aspects of management working together: Yang’s focus on expansion and assertive effort to maintain control, and Yin’s emphasis on flexibility and openness to change.
The key to developing a balanced organization is to recognize the benefits of a structured and clear, yet empathetic strategic plan.
For further reading: Yin and Yang Approaches to Management
Interested in hearing how to improve the value of your business? Find out more here.
Grace LaConte
Grace LaConte is a strategic growth expert, writer, and speaker. She is the founder of LaConte Consulting, providing business owners with practical solutions to improve their profit, growth, and value. Grace shares her thoughts about risk management and the dangers of predatory marketing tactics used in MLM (multi-level marketing), which you can find at https://laconteconsulting.com/blog. She is based near Houston, Texas.
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