Tales of Risk: 23 – Goldilocks and the Three Bears

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Why your business needs multiple “temperatures”

Risk Principles: Strategic Balance; Risk Appetite Calibration

Key Lessons: Extremes in risk-taking (too hot/cold, hard/soft) are dangerous. Success comes from iterative adjustment and balance – finding what is “just right.”

A blue-toned conceptual grid image of six panels illustrating the Goldilocks fable. Top row shows Papa Bear, Mama Bear, and Baby Bear with bowls on chairs. Bottom row shows stacked mismatched bowls on a chair, a small single bed, and a larger single bed, all within a wooden room environment.

In strategic governance, we often talk about “The” risk appetite – as if a multi-million pound enterprise should have one single setting for every department. But finding the “just right” isn’t about a single temperature; it’s about calibration across the portfolio.

The story of Goldilocks and the Three Bears teaches us about seeking equilibrium. But for a modern organisation, that equilibrium is a moving target. To thrive, you need to be “hot” where you grow and “cold” where you protect.

1. The myth of the uniform appetite

If your sales and research teams are “too cold,” they’ll never find the next market-defining product. If your health & safety or compliance teams are “too hot,” you are courting disaster.

Strategic calibration means allowing for high-appetite “adventures” in innovation and sales, while maintaining a rigorous, risk-averse “cold” stance on safety and ethics. The “just right” is found in the balance of the whole, not the uniformity of the parts.

2. The “green dashboard” delusion (a real-world warning)

I once observed a project board during a major strategic pivot. The company was entering a territory that was entirely new for them – high stakes, unknown variables, and significant complexity.

Yet, there was an unspoken culture of discouraging “red” risks. The project was consistently reported as “green,” because “red” was seen as a sign of trouble. In reality, entering a new market should be a red-status activity. If you are doing something difficult and dangerous for the first time and your reporting is all green, you aren’t in control – you’re just hiding the “pea.”

3. Calibration vs. Conformity

True resilience comes from knowing which “chair” you are sitting in at any given moment:

  • The “Hot” Chair (Sales & R&D): Encouraging bold bets and calculated failure.
  • The “Cold” Chair (H&S & Legal): Ensuring absolute protection of the core assets and people.
  • The “Just Right” (The Boardroom): Having the wisdom to oversee both without forcing them to be the same.
Lessons for risk managers: The calibration audit
  • Stop the “Watermelon” reporting: If a project is high-innovation or new-territory, demand honest “red” and “amber” reporting. “All green” in a high-risk venture is a failure of governance, not a success of management.
  • Segment your appetite: Map your departments on a temperature scale. Does your innovation team have permission to be “hot”? Does your compliance team know they must stay “cold”?
  • Audit the “new”: When entering a new market, re-calibrate your expectations. If your reporting doesn’t reflect the inherent danger of the venture, your data is lying to you.
  • Empower the dissenters: Just like Goldilocks, you need to test the beds. Encourage the “too hard” and “too soft” feedback from different departments to find where the organisation’s true limits lie.

Is your Board demanding “green” when the reality is “red”? At Imergo, we help leaders build a culture of honest calibration, ensuring your “hot” ventures don’t burn the house down. Contact us for a Strategy Calibration assessment.