Can you distinguish one from the other? Learning how to balance the pros and cons and make well thought-out decisions for your company requires honing your risk calculation skills.
Good risk vs. bad risk
Understanding the fine line between the two can mean the difference between wise business decisions and careless mistakes.
Many people grow up believing risk-taking is a negative trait. Parents, teachers, and administrators identified the rebellious kids in school or the naughty children at church as a problem, but these individuals may also have been risk takers.
And risk is an essential part of life. Whether people internalized those youthful lessons that rebellion and risk-taking are bad will affect how they conduct business if they become CEOs and executives.
When individuals grasp the healthy aspects of taking risks, they can begin to develop methods for taking smart risks to improve their business.
An object lesson
Igor Salindrija, successful entrepreneur and CEO of AskGamblers.com, has experience with taking risks. "My business model is simple: make decisions today to set yourself ahead of the competition in the future," Salindrija says. "I know the rewards of taking calculated risks, and I regularly push myself to step outside my comfort zone. It's a formula that has worked for me, and it's what I advise other CEOs to do as well."
Beneficial risks require careful planning. Bad risk tends to be a product of thoughtlessness. Fortunately, most CEOs and business owners wouldn't have arrived at their current position if they regularly made the latter type of decisions.
Good risk is the product of assessing needs, identifying areas that need improvement, formulating strategic plans, and executing initiatives while anticipating mistakes.
How to take calculated risks that will be successful
All successful business owners must learn the art of taking calculated risks. The practice may not come naturally, but it's essential for progress and longevity.
Follow this step-by-step guide to make productive decisions for your company.
For a business, risk can uncover new markets, new audiences, and new capabilities. Risk forces leaders to set aside their fears and take strides toward future success. Many people are tempted to give in to the voice in their head that says, "this isn't the right time" or "this didn't work last time." Learning to move past such insecurities will lead to new levels of success.
Leaders should work to maintain relationships and communication, but push past the details and take action. It's wise to meet with advisors and conduct brainstorming sessions for future initiatives, but you also need to get past the planning phase if you're truly going to make a difference in the future of your firm.
Regardless of the outcome, you should continue to accept the process of taking risks as a beneficial function of the company's game plan. The practice of risk-taking ultimately builds confidence and success as a firm learns to set itself apart from the competition.