Top of Mind: 6 Tips for Smart Risk-Taking
Everything good in life requires risk, but with an acronym we can break down how we choose our opportunities in the face of it. First, we carefully measure the size of the “reward” in regard to market opportunity, financial return and social impact. When it comes to “investment,” we are consciously aware of our time and resources. As far as “service” is concerned, we only work on projects that provide significant improvements to the world. Finally, our team must gain “knowledge” that can be leveraged on other projects and our own learning paths for the risk to be taken.
—Rebecca Devaney, CEO, Hunter Creative Labs
To measure risk, I do a lot of research on subjects to make sure I have enough knowledge to understand all of the risk factors. I also believe in my gut feeling sometimes. Risks are not all bad and can be an opportunity for individuals and organizations to grow. They also force you to reflect on your current status, assess your risk tolerance and build strength for the future.
—Vivian Zhang, founder, CTO, NYC Data Science Academy
The underlying issue around risk is often fear. I have the gift of living without fear. I left corporate America after many years in an executive position and became an entrepreneur. I set out to solve a problem I experienced in my industry. I measured the level of risk and knew it was incredibly high, but I also had the confidence to know the worst that could happen was that I had to find a job. Living without fear allows one to shoot for the moon.
—Lori Torres, founder, CEO, Parcel Pending
Risk is relative. Before making big decisions I ask myself four questions: What is the worst thing that will happen if this does not go as planned? If the worst thing happens, can I work around it? How would failure impact my other goals? Am I OK with that impact? If I'm comfortable with the answers to these questions, I'll move forward. If not, I won’t.
—Amber Anderson, founder, CEO, Kayson
I think I measure risk much differently than your average business person. While I always look at the financial impact an opportunity or decision can make on the business, I am always the loudest person in the room asking, "What happens if we don't act on this?" In my life, my personal mission is to better the world. I want to make this world a better place for future generations, and so a lot of time what most would consider risky decisions, I call strategic investments. Sometimes the biggest success is born out of the smallest ideas.
—Colt Parsons, founder, Resound Partners
As a venture-backed, high-growth startup, my attention is always on opportunity cost—where should we be spending our limited time and resources? What should we say no to? What do we have to do? In other words, lack of focus is a big risk. And asking those questions is a helpful framework for mitigating risk. The other lens I take is more existential—what could kill us? If we don't make it as a company, why would it have been? That invariable leads to a focus on cash burn, or what investment level is just right to balance investing in growth versus ensuring we have the maximum possible runway.
—Nadim Hossain, co-founder, CEO, BrightFunnel
Related: Afraid of Risks? How to Be Bolder
This article originally appeared in the October 2016 issue of SUCCESS magazine.