DREIESKIVA​|Roald Kvam

Every leader faces uncertainty. Markets shift, patient needs evolve, technologies change, and unforeseen crises arise. The ability to make decisions under uncertainty is not just a skill—it is a defining trait of effective leadership. At the heart of this skill lies one critical component: tolerance of risk.

Defining boundaries: The first step in risk-tolerant leadership

Tolerance of risk is not about recklessness; it is about clarity. Leaders must define the boundaries within which they are willing to operate. Which risks are acceptable, and which are not? Where do you draw the line between calculated risk and unacceptable exposure? Defining these boundaries provides a framework for consistent, confident decision-making even when the path ahead is unclear.

Asking the hard questions

Effective decision-making under uncertainty begins with asking the questions most leaders shy away from:

• What happens if we fail?
• What is the worst-case scenario?
• How likely is this outcome?
• What are the potential consequences for stakeholders?

These questions may feel uncomfortable, but they are essential. They transform fear of the unknown into actionable insight, allowing leaders to prepare for outcomes and mitigate risks before they become crises.

Weighing probability, impact, and consequences

Tolerance of risk is informed, not impulsive. Leaders deliberate on three critical dimensions:

1. Probability: How likely is this risk to materialize?
2. Impact: What are the consequences if it does?
3. Mitigation: What can we do to reduce likelihood or severity?

By evaluating these factors, leaders create a balanced perspective. They understand which risks are worth taking and which require avoidance or contingency planning. This is the essence of informed decision-making under uncertainty.

Acting decisively within parameters

Clarity and preparation are meaningless without action. Tolerating risk demands decisive behavior. Leaders must act confidently within the boundaries they’ve defined, trusting the process, their team, and their judgment. Indecision or over-analysis in uncertain situations often costs more than a calculated risk ever could.

Coaching leaders to thrive in uncertainty

From a coaching perspective, helping leaders navigate uncertainty involves three key practices:

1. Self-awareness: Understanding personal tolerance for risk and emotional responses to uncertainty.
2. Scenario thinking: Regularly exploring potential outcomes and preparing contingencies.
3. Reflective learning: After decisions are made, analyzing what worked, what didn’t, and how judgment can improve.

By cultivating these practices, leaders not only make better decisions—they model courage and clarity for their teams, fostering a culture that embraces smart risk-taking rather than fearing it.

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Decision-making under uncertainty is a test of leadership clarity, courage, and judgment. Tolerating risk is not about eliminating danger—it’s about understanding it, weighing it, and acting decisively within defined boundaries. Leaders who master this skill turn uncertainty from a threat into an opportunity for growth, innovation, and meaningful impact.