Corporate, organizational and personal risk profiles are dynamic and situational. Dynamic in that they change often. By the nature of organizations having a more gradual decision-making process than individuals, their risk profile changes more gradually. Individuals, on the other hand, may change their risk-profile much more often based on successes, set-backs, access to capital, financial security – or lack of it – and countless other variables.
Organizations are often overly risk-seeking in an upswing and overly risk-averse in a downswing. Call it the risk overhang, which can lead to the risk hangover. It is a function of excess – a risk posture that is no longer in alignment with the business and economic environment. It overhangs the change in conditions.
It is all a matter of balance – or lack of it. A successful risk posture always is.