Risk- Taking Ability in Business – Are you a ‘Calculated Risk-Taker’

In our last 2 blogs, we discussed the fear and confidence as integral parts of Business. In this session, we will be talking about one of the most important factors in Business – Risk Taking.

We often hear of success stories of entrepreneurs and businesses who were bold enough to take risks for something which they wanted to achieve. On the other hand, occasionally, there comes a story of a risk going southwards. So how can a determination be made regarding which risk is worth taking and which is not? Not considering the luck-factor, which some may point out as a reason for people’s success, a closer study of behavior pattern reveals that a person can significantly increase his “luck” by understanding the science behind Risk-taking.

Risk-taking can be considered almost synonymous with Business. Substantial growth can come only by taking substantial risks. A high level of decision-making, as well as sacrifice, is required at every stage in business. The question, however, remains if the risk of sacrifice is worth it.

We often come across a term – Calculated Risk. It may be defined as a hazard or chance of failure whose degree of probability has been reckoned or estimated before some undertaking is entered upon. Calculated risk is nothing but forecasting of consequences and deciding whether one can afford the losses if things don’t go according to plan. It is always a simple calculation of whether the profits gained in the transaction are worth the losses incurred otherwise.

Following are a few risks which an entrepreneur is bound to face in his business:

-          Financial Risk: In the end, it all comes down to the finances. An entrepreneur, especially in his early days, must face the risk of managing his money and be ready to incur financial losses.

-          Risk of Employee Retention: Businesses always have a problem retaining their old employees and creating a core group. Also, when an employee resigns from an organization, he takes valuable knowledge about the company with him.

-          Risk of External Competition: As a business, this is one of the biggest risks which can hit a business. To counter this, an entrepreneur needs to always be proactive in his approach and be updated with the world outside.

-          Statutory Risks: An entrepreneur must always be prepared for unforeseen circumstances as well. However, in this scenario, there are most of the times, if not always, indicators about the upcoming changes, what needs to be done is to keep an eye out for the changing trends.

Some risks are unavoidable, where as some can be avoided and played safe. However, for those who are willing to take the risk, the fruits which they bear are way sweeter. To leave you with a thought, there is an old Chinese proverb which goes

“Everybody wants to be a Diamond.. but very few are willing to get cut!”