Page 50 - Executive Warfare

EXECUTIVE W ARF ARE

RISK: Slice It, Dice It, and If It Looks Good, Eat It for Breakfast
One of the most significant attitude adjustments you will have to make as
you move into higher management is your attitude toward risks. If you
have played it safe thus far in your career, understand that you can no
longer avoid taking risks—big ones, where the stakes are frighteningly
high. On the other hand, if you’ve been a rambler and a gambler, you can
no longer afford to be entirely freewheeling, either. Higher management
is all about handling risks intelligently
and in a calculated fashion.
For example, we’ve recently come out
BE YOURSELF, BUT
of a period when mortgage lenders were
DISARM POTENTIAL
extending credit to virtually anybody,
CRITICS WHERE
devising subprime loans that allowed
YOU CAN BY
many people to get into the housing
BEING SELF-
market way over their heads. Clearly,
DEPRECATING.
there was going to be a backlash to that
kind of exposure, and nobody should
have been surprised when there was a tsunami of foreclosures in 2007.
But the CEOs of some of the world’s most sophisticated financial organ-
izations apparently didn’t see it coming and made big bets on securities
based on these subprime mortgages because they generated outsized fees
and returns. Charles Prince of Citigroup, E. Stanley O’Neal of Merrill
Lynch, James Cayne of Bear Stearns, and Peter Wuffli of UBS all lost those
bets, were forced to write down billions in late 2007, and lost their jobs.
In other words, these executives took on too much risk, which does
more to end careers than anything except taking on too little.
Even if you never have to deal with the kind of quantitative risks that
Wall Street uses to make its living, risk is still the name of the game. If you
work in a nonprofit, you may someday have to decide whether to accept
a big donation from someone who has been indicted or, worse, who gets
indicted after you take the gift and spend it. If you manufacture art sup-
plies, you may have to decide whether to move into the children’s craft

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