LEADERSHIP: WILLINGNESS TO TAKE CALCULATED RISK

 

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Only those who will risk going too far can possibly find out how far one can go.

– T. S. Eliot

Four Most important leadership qualities required in a senior military leader are:

• Foresight and Vision.

 

• Decision Making Ability.

 

• Willingness to take Calculated Risks.

 

• Broad shoulders to accept failure (No zero error syndrome).

 

Risk. Risk is defined as “effect of uncertainty on objectives”. It means uncertainty about the effects / implications of an activity with respect to something that is valued. In simple terms, risk is the possibility of success or something bad happening.

 

There is a difference between “risks” and “calculated risks”.

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Calculated Risk. Calculated Risk is an undertaking, whose chance of failure has been previously estimated, yet one considers that it is worth taking a chance because the result, if it is successful, would be very good.

 

Calculated risk appraises how realistic an idea truly is, and shoves aside the emotional partiality we often feel when embracing new opportunities. Calculated risk demands:

• Believing in oneself.

• Carefully assessing opportunities.

• Applying pragmatic principles.

• Identifying impediments.

 

Calculated risk taking necessitates accepting the possibility of failure.

 

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Calculated risk isn’t gambling or rolling the dice. Gambling requires putting your faith in something completely outside your control. Calculated risk takers evaluate the cost of taking on the challenge, then forge ahead knowing there’s no attestation for success.

 

Calculated risk isn’t the same as being reckless. Calculated implies one has examined the exposure and accepted the potential liability predicated on ones tolerance for absorbing any losses.

 

If you are not willing to risk the unusual, you will have to settle for the ordinary.

– Jim Rohn

 

Calculated risk taking is important:

• To avoid regrets. There’s nothing worse than looking back on our life and regretting not taking a calculated risk to try something bold that could pay big dividends.

 

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• It is a great learning process. When we weigh the advantages and disadvantages of every choice we make, there’s always valuable lessons to be learned. Calculated risks have greater odds of succeeding.

 

• It creates opportunities and chance to move ahead. Without taking calculated risks one would stagnate into routine. To achieve something one has to get out of their comfort zone. Taking the right risks is the difference between ordinary and extraordinary.

 

• It provides feeling of Purpose, Achievement and Satisfaction. These are essential for growth of any organisation.

 

• It boosts one’s Confidence. Success of calculated risk increases the individual and organisational confidence manifold.

 

You can measure opportunity with the same yardstick that measures the risk involved. They go together.

 – Earl Nightingale

 

Improving Calculated Risk taking ability:

• Increase mental strength and Emotional Quotient.

• Balance between Emotion and Logic.

• Get over the fear of failure.

• Drive your activities and decisions based on desire to succeed rather than fear of failure.

• Examine comprehensively all the factors.

• Create a list of the pros and cons and the potential risks versus benefits.

• Writing down the facts and reading them over helps.

• Discussion helps.

 

Bottom Line

Ability to take a calculated risk is very essential trait for good leadership.

 

Question

Are you good at taking calculated risks?

 

Suggestions and value additions are most welcome

Please share incidents when you have taken a calculated risk (besides share market)

 

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References

https://www.inc.com/amy-morin/this-is-the-biggest-mistake-people-make-when-it-comes-to-taking-risks.html

https://dictionary.cambridge.org/dictionary/english/calculated-risk

https://www.merriam-webster.com/dictionary/calculated%20risk

https://en.wikipedia.org/wiki/Risk