RISK is an inherent part of both investing and career growth. While being cautious can protect against losses, avoiding risk altogether comes with its own set of dangers – missed opportunities, underperformance, and stagnation. Historically, women are perceived as more risk-averse in investing and professional decision-making.

Taking calculated risks is essential for success, however, whether it’s investing in alternative assets, negotiating compensation, or making bold career moves. In today’s competitive landscape, professionals who embrace risk thoughtfully are better positioned to drive innovation, achieve financial independence, and create lasting impact.

In November 2024, I moderated a discussion at the Inspirational Women Forum & Leadership Awards, “The Risks of Being Risk Averse”, hosted by the US-based Los Angeles Times. I’ll share insights (lightly edited) about women and risk, from two of the panellists – Amber Ortiz, who is senior vice-president and senior private client adviser at City National Bank, California, and Lara Shortz, office managing partner in Michelman & Robinson LLP’s Los Angeles office.

Why have women historically been risk-averse?

Barbara Stewart: We earned this stereotype, honestly. Historically, “risky” in the world of investing was defined by investing in equities versus fixed income or cash. Thirty years ago, over 60 per cent of US men invested in stocks compared to only 40 per cent of women, leaving an investment gap when it came to stocks. But times have changed. In the 2001 to 2008 period, 65 per cent of men and 59 per cent of women owned stocks. By 2009 to 2017, the gap narrowed further: 56 per cent of men and 52 per cent of women invested in equities. The 2024 Gallup data shows that in fact 63 per cent of women own stocks versus 62 per cent of men.

In what situations do women continue to show an aversion to risk?

Lara Shortz: One case in point is that many women executives are apprehensive about having tough conversations around pay increases/promotions. They often have a harder time with these conversations. Pay equity has improved for younger professionals, but at the senior level, particularly for women executives, the pay gap often widens over time and becomes much harder to bridge.

This is not usually the result of intentional bias. It’s more about systemic factors. For example, women tend to change jobs less frequently, which limits opportunities to renegotiate pay. Yet, when hiring new talent, companies often offer higher salaries to attract candidates. The net effect is this: If women aren’t making career moves, they’re missing out on crucial pay discussions. Over time, this dynamic makes conversations about raises or promotions even more challenging.

Amber Ortiz: Risk is multifaceted and can be influenced by several factors.

I would argue that women are not risk averse but instead risk aware. Women take the time to understand the risk and evaluate all the potential drawbacks and how a decision might affect those they care about most – families, companies, and society.

What are the risks of being risk-averse?

Stewart: In my most recent research “Women & Alts: A Global Perspective” commissioned by private equity firm Kensington Capital Partners, my key finding was that globally men have double the exposure to alternative investments than women.

This is largely due to structural barriers in place such as lack of a network effect for women and macho-themed sales and marketing around alts. Whether low-alt exposure is actually due to risk aversion or other factors, what is clear is that underexposure to what is traditionally seen as a higher-risk asset class is a risk for female investors.

Shortz: In an increasingly competitive market, organisations need to foster a culture of innovation and experimentation. Why? Because in a competitive market you need to constantly think about ways to retain your talent. This requires a lot of creativity.

It also depends on the environment. For example, in my business of law – a traditionally risk-averse business – having an entrepreneurial environment focused on professional development is not common for law firms. We are creating a very positive, forward-thinking cultural environment. In industries with fast-moving and highly creative environments, it is also important to provide clarity and stability for your team. In my view, being intentional and transparent about your business’s goals and the culture you’re building is key to helping people feel supported and motivated.

Ortiz: Underperformance and regret. This is true for both investment performance and business success. Risk is relative, and your tolerance continues to shift and shape as time passes. People evaluate potential risk and return differently. Risk can be highly subjective and dependent on the influences surrounding the decision. Not only should we spend time evaluating the negative aspects of risk, but we also need to talk about how opportunities, creativity, growth, and resilience come from taking risk.

There have been multiple studies that conclude that women generate better investment performance than men. Men tend to be more decisive and confident when making decisions due to their ability to compartmentalise, while women evaluate all angles and impacts an investment or decision might have on their family, business, liquidity, or even society. We need to remember that we face risk in almost every decision and as leaders we must inspire confidence and encourage risk-taking while also maintaining a prudent approach to decision-making.

How can women replace risk-aversion with risk-awareness?

Ortiz: Take space and be involved. I suggest that you build a team of advisers you trust and respect and who listen and communicate effectively. Building a relationship with those who are advising you and your family is key. Surround yourself with like-minded women. I hold intimate all-women conversations (10-15 people) where we dive into a specific topic like estate planning, investing in real estate, and generational gaps. These all-women sessions provide space to ask questions, share stories of failure and success, and build a community of people that might have experienced a similar situation or have similar concerns.

Shortz: My best advice is to focus on what you do best and outsource the rest.

Truth be told, this philosophy applies to every aspect of life. Like so many women, I often find myself juggling work, family, and countless responsibilities. It’s not always easy to let go, but I’ve learnt that delegating tasks – whether at home or in the office – frees up time and energy to focus on what really matters. Outsourcing isn’t just practical, it’s empowering.

Stewart: My #1 tip comes directly from the super-smart women from around the world that I have interviewed over the past 15 years of research. Risk is not something to fear. It is something to understand and manage wisely. Whether in investing or career decisions, those who take calculated risks open doors to greater opportunities, financial success, and professional growth. Women are increasingly closing the investment gap and proving that being risk-aware, rather than risk-averse, leads to better long-term outcomes.

The key is to balance prudence with action, preparation with confidence, and strategy with boldness. By embracing risk intelligently, professionals can maximise potential, inspire others, and redefine success on their own terms.

The writer is a chartered financial analyst (CFA) with 30 years of investment industry experience