Why most people don’t take risks or are just happy with incremental risks in their life? What does it take for them to sever the umbilical cord of feed coming to them in terms of money, salary, societal comfort, same friends, same habits, same tasks, same challenges with marginal variance and instead why don’t they intentionally explore uncertainty with the hope that better financial models, more exciting career, new meaningful friends, enriched experiences and newer habits etc. could emerge. Why we do not make ‘risk taking’ and ‘continuous risk taking’ as a behavior alteration in perpetuity. The perceptible answer is fear of the unknown and risk of losing what one has (loss-aversion). Risk is the probability of losing something of value equated against a probable gain even if that gain could be substantial.



Ricardo Manzotti provides an interesting concept about rainbows. A rainbow doesn’t exist as a rainbow and it doesn’t appear so to whoever looks at the sky during a rainy day. When the sun’s white light passes from air into a drop of water, the component colours of light slow down to different speeds depending on their frequency. Each individual raindrop disperses white sunlight into its component colors. We see a wide band of colours in a rainbow but in essence we see one colour from each raindrop. From 1st raindrop we see just red colour as from where we stand the other dispersed colours from that droplet is not visible. From the raindrop below it we see just orange colour dispersed because of our angle, then yellow and so on. Hence for a rainbow to happen to us, the sun’s light has to strike the droplets at a certain angle and the observer has to be in a specific angle.

A rainbow therefore is not an absolute object, it is a phenomenon, a perception. Fear of any unknown vanishes when the ignorance associated with that unknown can be purged but to reach this position one has to take a leap of faith first, get inside the risk, get acquainted with it, feel it, educate oneself about the field in which the fear and risk was invoked and then one feels ‘after all not so risky anymore’. It has now become a path, as one is able to see its eventuality. Eric Clapton puts it as “Risk is trying to control something you are powerless over”. The moment one is in it, the powerlessness diminishes. Hence risk is a perception like a rainbow. Everybody doesn’t see it the same way. Some give a catastrophic connotation to risk, some give it an evenhanded interpretation and a few consider it venturesome, a brilliant opportunity, the likes of Henry Ford, Ray Kroc, Richard Branson, Donald Trump, Warren Buffet and a lot of others. Different teams in various organizations make a representation about risk to their respective boardroom and depending on the perception of the people at the helm, the firm decides to either take the risk or abandon an idea.



Risk allergy if nurtured can become a life long debilitation and one can pass through life without even becoming aware of it. For innovation (which is one of the strongest differentiators of the firm) to flourish, organizations cannot remain ensnarled in a ‘risk loath’ philosophy. Not taking risk could be a behavior seeking security as a value but there is a cost to be paid particularly in today’s hawkish business arena. Helen Keller said, ‘Security is mostly a superstition. Life is either a daring adventure or nothing.’ The business arena is entrepreneurial and innovation intensive. Risk taking in such an environment is mandatory for oxygenation and growth of the firm and reformation originates from the leadership team.

Risk takers don’t think they have conquered fear, they have the same anxieties that fear induces in normal people, they just interpret fear differently. Risk averse people on the other end of the spectrum think they are rational, objective, discerning and incremental growth seems fine for them as they don’t want to rock the existing boat. Nothing bad or judgmental about this and it is a fine philosophy but this approach though it sustains self-preservation, doesn’t path-break. The people in the middle, ‘the measured risk takers’ approach with deep analysis of their options and evaluate the pros and cons of their actions and risks. They are extremely analytical and will plunge-in only if the threat possibilities are minimized, mitigation plans are drawn, contingency blue prints are prepared, sensitivity analysis is done and are ready to wait for decades to take a plunge. This model works for many organizations but not for the likes of Apple, 3M,  Google, Amazon who thrive on innovation and risks.


Growth is important for mankind and all forms of growth: emotional, social , financial, intellectual, information, educational, scientific, relationship, philanthropic, spiritual, cognitive basically growth in all areas. Growth is inevitable for organizational sustenance but it is important for personal development too. For progress to be made, sections of the society has to evolve, innovate, experiment, take risks for instance scientists, space explorers, fundamental researchers, project planners, medical breakthroughs, construction, engineering and so on. First the individual takes risk, then the team, then the firm as a whole, community, city and as progressively states do it the nation becomes entrepreneurial and this trend is seen in the US. Being entrepreneurial is not the only manifestation of risk taking. Surgeons take risks, firemen, policemen, doctors, divers, wild life photographers, journalists, defense forces, trapeze artists, lovers, red cross workers all of them take inordinate risks. Even children take risks but their awareness is only maturing hence they don’t have full cognizance about their actions nor responsibility for the consequences.


Risk takers could also be categorized as better decision makers or simply better informed or just plain gutsy to take that leap of faith. They interpret options as opportunities and adept at imagining the end result of their vision as against the risk averse person who views the same option as a journey that may be exacting. Is there risk in growth? Jean Paul Sartre has said that ‘All human beings are condemned to be free’. Choices exist and all choices are risky but nonetheless choices do exist. It is in the harnessing of these choices, creating challenge and leaping into the stretch zone where human potential is put to test. Wouldn’t we like to explore human form or some form of life on other planets. Of course we do and some countries will take this risk of exploration before others do.

From an existential perspective, we are fine as human beings the way we are and we are not put on this earth for any specific purpose. Nietzsche’s philosophies state that life has no intrinsic meaning or values and that human’s are compelled to invent meaning. Everything is merely meaning attached by ourselves but even if we are artificially attaching meaning or conferring significance through meaning to explain our existence, our prefrontal cortex, that distinguishes us from animals, will not allow us to stop thinking and we are immensely endowed with curiosity hence a part of our brain will keep trying to take risks, keep inventing, innovating, improvising and the intensity of this will depend on the environment in which we are nurtured.


Amongst innumerable fears, anxieties, phobias (not touched upon in this post), here are a few common ones that prevent people from taking a risk:


This is precisely the culture that must be decimated right from our formative childhood and parents, peers, teachers, elders, society and all immediate associations that influence the child must be wary of its implications and their responsibility. In adult life, organizations must carry this baton to instill confidence and encourage an experimentation culture thereby creating a new breed of individuals & leaders. Let us examine risk from three perspectives:

  1. Risk taking in absentia of full faculties
  2. Risk taking with full cognizance
  3. Risk taking with a leap of faith


Can substance usage like drugs, alcohol and medicines induce one to take more risks?. Does alcohol lower inhibitions and induce risk taking behaviour?.  Yes to a very great extent and this is generally seen in social environments, relationships, house parties, pub friendships, concerts, and so forth. Read the post on addiction to understand the levels of intoxication and cognitive impairment.  Alcohol & substance use beyond permissible limits does affect judgment. ‘Risk taking in absentia’ (absence of mental faculties invoked by alcohol & substance abuse) therefore is not a valid construct here.



At the other end of the spectrum we have ‘risk taking with full cognizance’ and organizations manifest such behavior. The stakes are very high when organizations embrace risk hence they abandon the philosophical thought espoused by Soren Kierkegaard ‘leap to faith’ that later evolved to ‘leap of faith’ concept i.e. ‘the act of believing in or accepting something intangible or unprovable or without empirical evidence’. Progressive organizations do not abandon risk but they do take the leap of faith after fully evaluating the consequences of risk and there are principles and guidelines for it . ISO 31000 defines risk management as ‘The identification, assessment, and prioritization of  risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities’.

Adventurous flight of fancy or leap of faith does happen in organizations but it is enveloped by a strict process of risk management and the genuine intent is inviolability from a likelihood of failure for the firm, loss of stakeholders trust and insulation from consequences to the community and environment. Such processes are followed by most professional organizations, some take inordinate risks but still most firms remain fenced within risk reasonability.  Why ?, because risk is not an intrinsic company phenomenon alone. Just because a new CEO is more risk friendly and enterprising cannot immediately metamorphose the firm. Risk taking is a phenomenon nursed by social environment, cultural upbringing, nation as an entrepreneurial entity and factors such as rich corporate governance, robust investor protection, creditor rights, bankruptcy protection, strong and speedy judicial systems, accounting transparency, patent protection, disclosure practices, corruption and many others.


Silicon valley & Bay area, SFO, New York, Atlanta, Seattle, Austin, Boston, LA, in general America has an entrepreneurial seasoning to it and so does cities such as Toronto, London, Rio-de-Janeiro, Boulder, Tel-Aviv, Singapore, Shanghai, Seoul, Tokyo, Singapore and Hong Kong. In Europe the most entrepreneurial countries are Ireland, Sweden, the U.K., Finland, Denmark, The Netherlands, Norway, France, Germany and Switzerland. Geert Hofstede in his brilliant cultural dimensions theory has presented the factors that fosters risk and entrepreneurship such as:

  • Masculinity (MAS index)
  • Individualism vs. collectivism
  • Power-Distance index (PDI)
  • Uncertainty avoidance index (UAI)
  • Indulgence vs. Restraint
  • Long-term orientation vs. Short-term orientation.

Masculine culture values are competitiveness, assertiveness, materialism, ambition, power and in some countries for instance America both men and women pursue these values ardently as against many other countries where aspects of feminine culture takes priority such as relationship, quality of life, social environment, work-life balance, paid holidays, prolonged maternal leave, and so on. Not that one is better than the other but risk taking philosophy changes based on the MAS index. Similarly Individualism vs. Collectivism; some societies emphasise personal achievements and individual rights. In such cultures decision-making , risk taking, entrepreneurship and action oriented behavior is encouraged whilst in collectivist societies individuals are attached to a cohesive group or to extended families and there is an umbilical cord feed that protects and secures any eventuality. In such cultures the need for aggressive risks may not arise. Social stigma is another vital factor that decides risk-taking attribute. Certain cultures do not consider failure as a detrimental occurrence rather they encourage it and such experiences embolden the individual and eventual ascendancy to flourish happens with one of the well-executed ideas. Silicon valley is a quintessential example of this.



One can keep synthesizing data, excel sheets, PowerPoint analysis till the cows come home and eventually end up with a conservative ‘don’t acquire’ or ‘don’t merge’ decision in case of an M&A team in organizations and competition comes and grabs the deal and the regret cycle begins. One can keep checking the real estate price sensitivities in recession, currency fluctuations, economic indices, 3 year predictions and so on and keep investment options in abeyance and realize that less knowledgeable people went for it and in 5 years made a deal of it. One can keep looking at the basis points, bear market manifestations, dividend yield, P/E ratio and so forth prior to stock investments yet take no action. One can keep evaluating the attributes and compatibility of a partner whilst seeking for the optimized match, one can keep looking for a house for two years to fit one’s imaginative aesthetics, one can think for a decade to become an entrepreneur and keep waiting for the right savings to accumulate or market position to improve. In spite of all these prudent measures it is also possible that at some stage the rationality finally vanishes and one just plunges into it, takes a leap of faith and decides to play in the arena. This is risk taking with a leap of faith, a commitment to oneself without any tangible guarantee of the outcome. A statement to themselves that one has faith in the process and that will lead them to their destination and with the express understanding that this would involve considerable discipline, passion in the field of choice, prudent strategies, smart working and incredible resourcefulness’. As Seneca puts it “It is not because things are difficult that we dare not venture. It’s because we dare not venture that they are difficult.”


There is an interesting piece of news on NY Times ‘Terrifying Playgrounds’ : Two Norwegian psychologists Leif Kennair and Ellen Sandseter think that modern playgrounds are for wimps. Instead of short climbing walls, there should be towering monkey bars. Instead of plastic crawl tubes, there should be tall, steep slides, balance beams and rope swings. The rationale is that the more we shield children from potential scrapes and sprained ankles, the more unprepared they’ll be for real risk as adults, and the less aware they’ll be of their surroundings”. Risk taking has to be encouraged from childhood. Our ability to innovate, expand, succeed, accomplish, ability to grow, contribute all come from our ability to take risk beyond our comfort arena. We cannot explore our fullest potential unless a culture of risk taking is instituted. Query Richard Branson about Virgin Galactic project’s rationale and approach and many aspects of the philosophy of risk can be gleaned. Commercial flight into space is indeed a path-breaking phenomenon.

Here is the commencement address delivered by Steve Jobs, CEO of Apple Computer and of Pixar Animation Studios, on June 12, 2005 “You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”


Let us quit frisking ourselves for guts; it incontrovertibly exists but perhaps locked up to perform digestive duties. In addition to the metabolic responsibilities it has, let us put it to more functional use that gives the metaphor ‘gut feel’ its remarkable allure. Let us bring a little non-conformity in our approach but with an informed approach of Risk assessment, containment & management. If I anthropomorphize risk, it is one of the most magnanimous personalities out there, it is always offering itself , and it is always for the taking. Let us begin with our own personal lives and indulge in whatever that we have held in abeyance so far, let us at least try it once. As Groucho Marx puts it ‘ I intend to live forever, or die trying.


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