How the Way Women Look at Risk Helps Firms - Building Gender Balanced Business

Debora Spar, president of Barnard College and a former Harvard Business School professor, says she “can’t help noticing that all the perpetrators of the greatest economic mess in eight decades are, well, men. Specifically, they are rich, white, middle-aged guys….” If only some more women had been involved on Wall Street, she suggests, the risk-based mess we are in might have been avoided. Her view is based on how women approach risk:

• Men, and especially alpha males, are particularly overrepresented in the largest US financial firms, with not a single one being led by a woman and women making up less than 18% of top corporate officers. Let’s not even discuss how few women there are at hedge funds.

• Women seem to perceive and act on risk in subtly different ways, Spar notes, in general avoiding “massively aggressive behavior”. “[W]omen may be less inclined than men to place the kind of bets that can get them in real trouble.”

• Women also are less likely to look the other way when others engage in particularly risky behavior, being far more willing to blow the whistle.

• Diversity of opinion and in approach to risk is necessary for the bottom line, Spar notes.

• “We need women in leadership positions not only because they can manage as well as men but because they manage differently than men; because they tend — over time and in the aggregate — to make different kinds of decisions and to accept and avoid different kinds of risk.”

Debora Spar’s column in The Washington Post