The Business of Taking Risks

Management consultant, blog writer, dreamer

Taking risks is common behavior. Indeed, taking risks is for many of us a means to an end. In fact, without taking risks, neither your business nor you will ever know your true potential, says John Benjamin in the Tribune. But why is taking a risk so easy for some and, on the other hand, so difficult for other? It has a lot to do about who we are, and the environment we are operating in.

What does taking risks mean?

According to the Collins Dictionary, risk-taking means taking actions which might have unpleasant or undesirable results. So it is something you do as a result of a decision you’ve made. And most of the time something or someone has triggered you to make a decision 1.

For example, like losing your job. Losing your job is one of the most traumatic events that can happen with you. It happened to me, twice – sadly I’ve got first-hand experience… However, I’m grateful for the lessons I’ve learnt.

Indeed, by the time I went through all the stages of grief – denial, anger, bargaining, depression, and, lastly (thankfully), acceptance – I was out of money. In fact, my dire situation forced me to decide between sustaining myself (by making a plan to earn a living) or to maintain my status quo (and hoping for the best).

I chose to start looking for ways to earn an income. Of course there’re risks involve if you decide to stand up and start over again. But, at least now you’ve found purpose in your life again. On the other hand, had I choose to do nothing, I would’ve taken a chance, which is different from taking a risk.

“An outsider might think that entrepreneurs take chances. That’s simply not true. They take risks -and there’s a profound difference”, writes Brain Fielkow recently in The Entrepreneur.

How to takes risks

“I can accept failure. Everybody fails at something. But I can’t accept not trying. Fear is an illusion.” — Michael Jordan (HuffPost). Micheal Jordan has taken the human aspects of risk-taking nicely together – the effort, the fear and the outcome.

We‘re all individuals that may react differently on situations when we have to take a risk (or not). But at least we’ll all be feeling and thinking about how to approach risk taking when the time comes.

Indeed, risk in the modern world is perceived and acted on in two fundamental ways 2.

  1. Risk as feelings refers to individuals’ fast, instinctive, and intuitive reactions to danger. That’s how we traditionally perceived risk, at a time when we were still hunters/gatherers. Saying that, the importance of affect with risk-taking is recognized more nowadays. It may help us to make decisions more quickly and efficiently.
  2. Risk as analysis brings logic, reason, and scientific deliberation to bear on risk management. This perspective of risk-taking comes from contemporary systems-thinking 1. It shows us that as intelligent self-sustaining systems we have three ultimate goals: survival, growth, and mission. And risk-taking is something we do to achieve our mission and also gives us purpose and direction.

Toby Nwazor, also writing in The Entrepreneur listed three things about taking risks:

  1. Risks are not taken at a whim. Many assume that when the occasion demands it, the typical perpetual risk-taker jumps in without thinking. However, careful planning and hard work precede risk-taking.
  2. No matter what the outcome, risks almost always yield dividend. If a risk you take comes off, then your success is the result of hard work and planning. But what if your risk-taking venture has failed? Well, you’ve probably learned some valuable lessons from the failure…
  3. Feel the fear but do it anyway. You may have planned everything or have a backup in place, but for some reason, something still is keeping you from taking action. That force is fear, and it’s so strong that you can feel paralyzed.

Concluding

“There’s never a crossroad where we have to take a blind risk between success and failure. Risk is a dial that we have much more control over than we often imagine. And we can reduce risk by increasing the number of attempts at succeeding” pondered Douglas Karr in Forbes.

What concerns me about taking risks is all the information (data) that is quickly and easily available on the internet. So if you want to take an informed decision to use an opportunity or solve a problem, which data will you use? And then things can change so quickly!

Maybe, here amidst the 4th Industrial revolution, we need to revisit what we learned about risk-taking when we were hunters. Should we rely on our instinct or gut feeling, like we did thousands of years ago?

What could go wrong?

Read also:

  1. Making Difficult Decisions are Necessary to Keep a Business on Track
  2. The Humanity of Decision-Making: A Business Perspective…

A well researched and written Business Plan helps to get your business started the right way.

Notes

1 Noorani, H. 2010. Rational decision-making, Xlibris Corporation.

2 Slovic, P., Peters, E., Finucane, M.L. and MacGregor, D.G. 2005. Affect, risk, and decision making, Health Psychology, 24(4S):S35-S40.

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Douw G Steyn

Management consultant, blog writer, dreamer

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