SCORE Small Business Blog

Leadership: Stop Worrying and Take the Right Risks
5 Comments

Turn Risk into Opportunity

iStock_000004295280XSmallClose your eyes and picture a risk. Is the picture in your mind’s eye a danger or an opportunity? Few of us realize that risk is not necessarily something bad, and in fact can lead to something wonderful. Another common misconception about risk is that it is all or nothing. Either you can control all of the outcomes of a decision or you can control none of them.

For budding entrepreneurs or early-stage enterprise leaders, this misconception can be paralyzing. Yet the most effective leaders are those that embrace risk and manage it towards the most positive outcome.

In truth, the knowledge and control you have over the factors included in risk are always on a spectrum. Especially in these times of economic upheaval, the degree to which you can know and control all that is knowable and controllable depends on the tools you have available at the time of decision making. And the knowledge you have will never be complete because no one, you included:

  • Knows the future except in hindsight.
  • Can ever know everything because everything and anything is subject to change without notice.
  • Has enough time to identify and evaluate all options and choices.
    .

Once you recognize what is controllable and knowable and what is not, the most essential and least asked question is “what is the worst case scenario?” If you can live with your answer, then the risk is a likely path to opportunity.
Each one of us has a different tolerance of the unknown and even the “worst case scenario” varies based on the eye of the beholder. For this reason, truly knowing and understanding your own style and appetite for risk can be one of your most powerful assets. Picture a continuum, if you fall on one end you are a “Risk Worrier™;” on the other end, you would be a “Risk Warrior™.”

Risk Worriers are people whose motto is “better safe than sorry.” These are the leaders who over-rate uncertainties, are pessimistic about outcomes, and prefer security and status quo to reaching for potential opportunities. The term “analysis-paralysis” definitely applies to these risk-avoiding leaders.

Or are you a Risk Warrior? Someone who participates simply for the risks involved and might be seen as over-daring when it comes to risk? This end of the continuum brings a different set of problems that can occur when the risk taken is not well understood and the chances of failure are increased.

Or do you fall somewhere in between? Do you step back and assess the risk and its consequences to determine if the probability of potential success is greater than the probability of potential failure? Ask yourself when you hold yourself back from risk taking and identify the times when you were willing to take risks. Looking for a pattern will help you understand your style and assist you in assessing when to take risks and when to pass because, at base, if the ROI is not greater than the chance of failure, then passing on the risks increases your chances of success next time.

Elaine Eisenman, Guest Blogger 
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Discussion (5) Comment


  1. Leah PiepmeyerVisitor

    Everything that you do in life is a risk. Starting from stepping out of bed in the morning (you may twist and break your ankle) to getting behind the wheel of your car (may have a crash) to going to work (always that possiblity of a layoff). If I’m going to start every morning with a risk, why be scared to step out of my boundaries and take them? If you don’t ever take a risk, you will never know what “could have been”. You will only know what is


  2. JaimeVisitor

    I love the part about recognizing what is controllable and knowable and what is not. I am always asking myself the “worst case scenario” question. I know that if I can live with either outcome I will be fine.


  3. MichelleVisitor

    Taking risks is a goal I personally want to work on. Its not that I am afraid to take risks, but I know that I could exercise taking more risks than I do. It is important to remember that taking risks can bear success and sometimes failure. But sometimes you have to fail before you can succeed! :) Thanks for your post, it was great!

  4. Taking risks is essential to succeed. People who play safe are the worriers. Yes the pro and cons of the risk being taken should be considered.


  5. LucyVisitor

    I was always afraid to take a lot of risks in my life, but being more self aware and having the peace to accept circumstances that can’t be altered is important. Thank you for your post. I wanted to share something quick with you. If you’re building your career and don’t have time to shop for and prepare healthy meals, a treat of delicious and fresh meals can be delivered to your door each day. Check out Chefs Diet and you could win a free month of nutritionally balanced, 40/30/30 meals at http://www.myChefsDiet.com.

 

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