Business leaders face challenges and risks in good times and bad.

If there weren’t any challenges, leaders wouldn’t be needed. If nothing ever changed, good management would be enough.

The ability to deal with challenges is what defines a leader. Leaders that respond to challenges with focus, resolve, and execution are most often successful in meeting them. Those that are slowed by unfavorable headwinds, demoralized by setbacks and get bogged down in activities that don’t create value are those that fail.

Today’s business climate is as challenging as any in recent memory.

To gauge the challenges and risks facing today’s business leaders, the risk management and reinsurance giant Aon surveys about a thousand of them every year. This year, not surprisingly, business executives around the world identified the current economic climate as the number one challenge facing businesses and their leaders. The global economic slowdown poses risk for all enterprises, large and small.

The business leaders’ 2011 top ten risks list also reflected some new concerns. For the first time, the leaders surveyed listed “failure to innovate and meet customer needs” as a top-10 risk. Start-ups and other upstart businesses, perhaps enabled by new technologies, are more forward-looking and proactive and pose a threat to their more established competitors.

Another new concern, also technology-related, is the risk of technology or system failure. All aspects of business are now so dependent on technology that an interruption, whether intentional or accidental, could be catastrophic. Moving up the list this year is the concern that firms will lose valuable human resources and be unable to attract talent due to layoffs and downsizing. Other top challenges cited were regulatory changes, reputation management, and increasing competition.

The Aon survey certainly reflects a business climate with strong and shifting headwinds but the response of business leaders to these challenges should be based on principles and principles never change. One such principle is the power of execution: when the way forward is clear, do not let the resistance stop you. Leaders who move forward decisively will always face resistance but once you have considered all the factors and decided on the right path, follow that path decisively. Another component of execution is to act boldly. If competitors are out-innovating you and you need to take your organization in a new direction to compete, do so boldly.

Like execution, the power of focus is an important leadership principle when facing tough and shifting challenges. Part of maintaining focus as a leader and an organization is to eliminate activities that don’t add value. Don’t get bogged down in the weeds. If certain meetings or activities are unnecessary and unprofitable, get rid of them. Focus is especially important in times when no one can afford to waste time or carry unnecessary baggage.  Likewise, it’s important to identify your MVP activities, where MVP stands for most valuable and profitable. Every segment of every day is more valuable than ever. Maximize that value by spending your time on the activities that benefit your organization most.

Finally, when faced with difficult and changing times, leaders must serve as a source of hope for their organizations, communicating their belief that something better is just down the road. This doesn’t mean ignoring or glossing over difficulties, but rather showing people that if they face them head-on and decisively, the challenges can be overcome.

I’ve observed, spoken about and written about these leadership principles for years. While the challenges change, the essentials of great leadership do not. While the principles that leaders use may change in the way that they are applied, the underlying truth of the principle ultimately pays off.

While the world around us, and the business climate we face, can change at breakneck speed, our responses to new challenges should be based on abiding principles of leadership. And whether you have a title or not, if you meet the challenges you face with action based on these principles, you meet the true definition of “leader.”

(And for a look at how to develop leaders at every level, click here.)

What are your biggest challenges as a leader? Share your thoughts with me on Facebook and Twitter as well as in the comment box below