Risk is an inherent part of both investment and career growth. Being careful can protect against losses, but avoiding risk completely has its own set of dangers – missed opportunities, performance, stagnation. Historically, women have been perceived as more risk aversive in investment and professional decision-making.
However, acquiring calculated risk is essential to success, whether investing in alternative assets, negotiating compensation or making bold career moves. In today's competitive landscape, risk-bearing experts are in a better position to promote innovation, achieve economic independence and create lasting impacts.
Last month I moderated the discussion at the Inspirational Women Forum & Leadership Awards, “The Risks of Risk Aversion.” Los Angeles Times. In this blog post, we share insights (lightly edited) from two panelists Amber Ortiz and Lala Shorts on women and risk.
Why have women historically avoided risk?
Barbara Stewart, CFA: Honestly, I got this stereotype. Historically, “risk” in the investment world was defined by investments in bonds and bonds or cash. Thirty years ago, over 60% of US men invested in stocks compared to just 40% of women, and there was a gap in investment when it came to stocks. But times have changed. Between 2001 and 2008, 65% of men and 59% of women owned the shares. Between 2009 and 2017, the gap narrowed even further. 56% of men and 52% of women invested in stocks. Gallup data for 2024 shows that 63% of women actually own stakes versus 62% of men.
Under what circumstances do women continue to show aversion to risk?
Lara Shorts: One example is that many female executives are worried about having a tough conversation about pay increases/promotions. They often struggle with these conversations. Though pay for younger professionals has improved, at the advanced level, wage gaps often widen over time, making bridging much more difficult at the advanced level, especially for female executives.
This is not usually the result of intentional bias. It is about systematic factors. For example, women tend to change jobs frequently, limiting opportunities to renegotiate their pay. However, when hiring new talent, companies often offer higher salaries to attract candidates. The net effect is: If women are not in career movements, they miss out on the key pay argument. Over time, this dynamic makes conversations about pay raises and promotions even more challenging.
Amber Ortiz: Risks are multifaceted and can be influenced by several factors.
I argue that women are not risk averse, but instead there is a risk of perceiving. Women take their time to understand the risks and assess all the potential shortcomings and how decisions affect most family, business and society-related people.
What are the risks of risk aversion?
Barbara Stewart, CFA: In my latest study, “Women & Alts: A Global Perspective,” my key finding commissioned by private equity firm Kensington Capital Partners, is that men worldwide doubling their exposure to alternative investments than women. That was it.
This is primarily due to structural barriers, such as lack of networking effects among women and macho-themed sales and marketing surrounding ALT. Whether low ALT exposure is actually due to risk aversion or other factors, it is clear that the lack of exposure to what is traditionally considered a high-risk asset class is a factor in female investors. It is a risk of
Lara Shorts: In an increasingly competitive market, organizations need to promote a culture of innovation and experimentation. why? Because in a highly competitive market, you need to constantly think about how to maintain your talent. This requires a lot of creativity.
It also depends on the environment. For example, my law has a traditional risk-averse business – having an entrepreneurial environment focused on professional development is not common in law firms. We create a very positive and moving cultural environment. In an industry with a fast-moving and highly creative environment, it is also important to provide clarity and stability to your team. In my view, being intentional and transparent about your business goals and the culture you are building is key to helping people feel supported and motivated.
Amber Ortiz: Degraded performance and regret. This applies to both investment performance and business success. The risks are relative and over time your resistance will change and continue to shape. People assess potential risks and return in different ways. The risks are highly subjective and can depend on the impact surrounding your decision. Not only do we spend time assessing the negative aspects of risk, we also need to talk about how opportunities, creativity, growth and resilience come from taking risks.
Several studies have concluded that women produce better investment performance than men. Men tend to be more decisive and confident when making decisions due to their ability to compartmentalize, but women evaluate all angles and invest in and decide to family, business, liquidity, or society. It may have an impact. We need to remember that we face risks in almost every decision. As a leader, you must maintain a careful approach to decision-making, while inspiring confidence and encouraging risk-taking.
How can women replace risk availing with risk awareness?
Amber Ortiz: Take up space and get involved. We recommend building a team of advisors who trust, respect, listen and communicate effectively. It is important to build relationships between you and the people who are counselling you and your family. Surround yourself with like-minded women. I hold intimate full-female conversations (10-15 people) and dive into specific topics like real estate planning, investment in real estate, generational gaps, and more. These all-women's sessions are spaces to ask questions, share stories of failure and success, to build a community of people who may experience similar situations and have similar concerns. Provides.
Lara Shorts: My best advice is to focus on you doing your best and outsource the rest. For example, when it comes to negotiations for compensation, you can create a completely different dynamic by having your lawyer handle it. Remove any personal biases like questions about being too assertive and focus your attention on the terms of the contract.
The truth is said, this philosophy applies to all aspects of life. Like many women, I often juggle work, family, and countless responsibilities. It's not always easy to let go, but I've learned to increase my time and energy by delegating tasks at home and at the office, and focus on what's really important. Outsourcing is not just practical, it empowers.
Barbara Stewart, CFA: My #1 tip comes directly from super smart women from around the world who I interviewed in research over the past 15 years. Risk is not something to be afraid of. It's about understanding and managing wisely. Whether it's an investment or a career decision, calculated people are opening the risks that have opened the door to greater opportunities, financial success and professional growth. Women are increasingly closing the investment gap and prove that being risk perception rather than avoiding risk leads to better and longer term outcomes.
The key is to balance your strategy boldly with prudence, action, preparation, confidence. By accepting risk intellectually, experts can maximize their potential, inspire others, and redefine success on their own terms.
