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Importance of Risk Taking Abilities for Entrepreneurs

Importance of Risk Taking Abilities for Entrepreneurs!

Risk can be defined as the possibility of failure or loss or other adverse consequences in pursuing some activity or venture. Risk bearing and entrepreneurship are inseparable from each other. Risk, as an attribute, affects entrepreneurial behavior. It is, among other things, the element of risk involved in entrepreneurial career, many people become hesitant to become an entrepreneur.

Even those who take risk by joining entrepreneurship differ in the degree of risk taking ability and willingness. Depending on the degree of risk, risks can be categorized as high risk, moderate risk, and low risk. All three types of risks influence entrepreneurial behaviour differently.

Three Types of Risks Influence Entrepreneurial Behaviour

Compare your answers with the responses given below:

If you answered ‘Yes’ to questions 2, 5, and 9, you may need to develop a greater willingness to take risks.

Table 10-6: Checklist for Willingness to Take Risks:

1. Can you take risks with money, that is, invest, and not know the outcome? __Yes __No
2. Do you take an umbrella with you every time you travel? A hot water bottle? A Thermometer? __Yes __No
3. If you’re frightened of something, will you try to conquer the fear? __Yes __No
4. Do you like trying new foods, new places, and totally new experiences? __Yes __No
5. Do you need to know the answer before you’ll ask the question? __Yes __No
6. Have you taken a risk in the last six months? __Yes __No
7. Can you walk up to a total stranger and strike up a conversation? __Yes __No
8. Have you ever intentionally traveled an unfamiliar route? __Yes __No
9. Do you need to know that it’s been done already before you’re willing to try it? __Yes __No
10. Have you ever gone out on a blind date? __Yes __No

How to Develop Risk-Taking Behaviour?

Like creative behavior, risk-taking behavior is also not inborn. Therefore, it can also be developed. How? We all have an inevitable but different risk-bearing orientation based on our background, education, value-system, personality, experience, etc.

Accordingly, some of us have high risk-taking orientation, some others have moderate risk-taking, and yet some others have a low risk- taking orientation. This orientation of our risk-taking persists within us unless we try to change it. Both low and high-risk orientations have entrepreneurial implications. While the high-risk orientation makes the objectives of enterprise unattainable, low-level risk does not arouse required challenge for achievement in establishing and running an enterprise.

In fact, it is often the moderate level of risk that makes the entrepreneurial venture both attainable and challenging, i.e. the two essential ingredients of entrepreneurial success. Hence, there is a need for entrepreneurs to have a moderate level of risk-taking orientation to succeed in their entrepreneurial venture.

The different ways and means like high optimism, tolerance for ambiguity, high need for achievement, passion despite failure, belief about one’s (internal) locus of control, perseverance, etc. can help one appropriate his/her risk-bearing orientation at a moderate level.

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Salman Qureshi

Salman Qureshi is an Accountant by profession & he loves to write on Commerce & Management Sciences Subject to assist Students. Hope you guys will like his effort.