Assessing Risk

The risk orientation of entrepreneurs varies. People often think that entrepreneurs have a predilection for exposing themselves to great dangers and hazards. That is not the case. Very often, they don’t think they’re really taking any unreasonable risks at all. They just have a certain clarity of thinking, and they see things that others don’t. So the kinds of risks they are taking are calculated.

As an entrepreneur, you should always be asking, “Is there a way of doing this more safely?” It is important to recognize that no matter how much you work on your business plan, there will always be unexpected twists and turns. Part of determining what is a reasonable risk involves asking the “what if” questions. You work through what could go wrong and then ask, “What can I do if these things happen? At what point should I decide to reassess or change course?” Then you look at the kinds of things that you can do to prepare for different scenarios. You may feel that there are certain bets you must make in order to succeed. But understanding the critical assumptions that you are making about your environment and your capabilities and how potential hazards can be avoided or controlled – that thought process is a calculating process. It doesn’t mean you have all the answers, but you do have a very well thought-out vision.