Study Finds Women Leaders Are More Strategic Risk-Takers Than Men, But Endure a ‘Risk Tax’

When Meg Sullivan worked at a big international law firm, she knew she was taking a huge risk when she decided to set up a new practice area. She knew based on market trends that the window to act was now, but the firm was firmly focused on immediate revenue at the time and she was aware that the new venture would need time to grow. So instead of asking for permission (which rarely led to a “yes” in her experience), she moved forward strategically and established the firm’s impact investing practice, which is now an eight-figure revenue driver.

“I noticed early in my career that if I spent too much time asking for permission for things, I never got it. So I decided to take away the ask and plead mea culpa later if I needed to,” explained Sullivan, now Founder and CEO at The Quorum Initiative. “Ninety-nine percent of the time I never needed to because the risks that I was taking were smart risks.”

For women at the highest levels of leadership, this kind of risk-taking has proved essential. In fact, a recent study by the Journal of Business Research found that corporations led by women CEOs and those with higher numbers of women executives and directors undertake more financial risk than those led by men. Researchers, who analyzed all S&P 500 executives and directors from 2009 to 2019, speculate that women executives may face a “risk tax,” which requires that women take more risks than men to achieve top positions. Women aiming for top roles must fight existing gender stereotypes that might label them as risk-averse, so they often take the calculated risks necessary to be high achievers.

“Unfortunately, women can be underestimated often in terms of what they bring to the table,” says Sullivan. “But being willing to step out of your comfort zone, bring innovation into your area, or come up with new ideas that drive business growth, those things inevitability get you noticed, in a way that you might never have been noticed before.”

While women stereotypically have been seen as more risk-averse than men, research continues to prove otherwise. Another study in the Psychology of Women Quarterly found no difference in how men and women take risks at work, but it did find that women suffered more negative consequences for taking those risks, such as asking for a pay raise, but then being viewed as arrogant or entitled, or asking for support with a difficult task, then being viewed as lacking independence. So any difference in risk-aversion was due to blowback, not a “natural” or “biological” behavior pattern.

These studies also show that women aren’t reckless gamblers — they often take more calculated strategic risks that have long-term payoff. For instance, the Journal of Business Research study found that women executives were more likely to invest in capital expenditures and R&D, leading to more long-term revenue potential and innovation.

For women to be able to take those kinds of strategic risks, leaders need to cultivate mentors both within and outside of the organizations, sponsors within the organization to advocate on your behalf, and allies within the organization who will help you execute. “I never took a risk without actually bringing on board some allies who were going to help. That’s mission critical,” says Sullivan.

She also recommends cultivating your own personal board of directors, which for her were people who had a lot of business experience, understood how to navigate complex environments, and brought different kinds of skills together. “Risk-taking gets lonely. You’re out front and on your own,” she says. “When I got nervous, or when I was questioned or was questioning myself, I would tap into those folks who lifted me and gave me good advice.”

Taking risks also means that we have to be prepared for the occasional failure. It’s often the fear of failure that keeps us from taking big swings, and for good reason — studies show the pain of losing can be twice as powerful as the pleasure of gaining. Leaders need to be attuned to the types of risk they’re taking, ensuring the risk level they’re taking on aligns with strong business outcomes and high impact.

When big risks do pay off, women should take credit for their decisive actions in the face of doubt. Many leaders feel pride in sharing their success with their teams and allies, but can be shier when it comes to self-promotion. “When I ran big teams, women would come in at evaluation times and would be so kind and give everyone credit, but they forgot to give the ultimate credit to themselves,” says Sullivan. “That’s a moment that really matters that you can own.”

Taking a pole position in important meetings and staying visible in the project that’s come to life can also ensure you stay in the line of sight for its success. PR and communication teams can also be allies in promoting wins externally, and help shape your position as a spokesperson for your idea or impact.

Executing bold ideas often means operating on your own belief in a project or plan, even when no one else does. By embracing that risk, women can make the big bets that can define a company — and a career — for decades.