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Importance Of Calculated Risk-Taking

You may have heard advice such as “go with your gut” or “listen to your heart” from time to time….

November 2, 2020 | 3 mins read
Importance Of Calculated Risk Taking

You may have heard advice such as “go with your gut” or “listen to your heart” from time to time. People usually give such suggestions when you can’t decide whether or not you should take certain decisions or risks. Such advice can work for you but only if you are taking calculated risks. But while doing so, don’t confuse your fear with your gut feeling and give up before even starting.

What is calculated risk-taking? How do you decide if you are taking foolish or calculated risks? Let’s find out.

Foolish vs. Calculated Risk-Taking

There’s a big difference between taking foolish and calculated risks.

In short, a foolish risk is that which you take without doing any research or assessing the possible negative consequences. You would be moving forward blindly, which means that you can succeed or fail, but if you fail the consequences can be huge as you don’t know what’s waiting for you.

Calculated risk-taking, on the other hand, involves a fair amount of research. Like it’s with taking any risk, the results may not always be positive, but at least you will have a fair idea of what’s in store with you and the chances of succeeding or failing.

Tips For Taking Calculated Risks

Now that you know the meaning of calculated risk, let’s find out how to measure risk.

1. Do Research

Do your due diligence before making a decision. Calculated risk-taking means understanding every little detail you can about the risk. This will help you discover any red flags and potential issues beforehand, and you will be ready with the answers or at least have a fair understanding of the possible setbacks.

2. Anticipate Mistakes

A smart risk-taker anticipates potential mistakes before moving forward. Think about every possible outcome, both positive as well as negative.

Calculated risk examples can be found in financial, mental and emotional situations. So ask yourself questions like: What if the deal fails and you lose money, how would your business cope up? If a partnership breaks, what will be the next course of action? If the team is facing some setbacks, how will you meet project deadlines? Such questions can help you assess the negative outcomes and you can accordingly figure out how to deal with them.

3. Set Milestones and Goals

The purpose of taking a risk is to achieve a certain goal. Step out of your comfort zone to achieve something. It could be anything from signing up a new deal to expanding your business.

However, whatever be the goal, know that it could take months or even years to achieve it. So, how do you keep yourself motivated from the start to the end? That’s where your carefully assessed milestones will come in handy. Deciding on the checkpoints in between is as important as setting up the goals.

4. Learn to Say “No”

Whether it’s in your career or personal life, everyone faces situations where they have to step back and say “no”. But not all of us have that skill, especially when it comes to taking potential risks or opportunities.

However, tempting and beneficial it may look, jumping at every opportunity will exhaust you in the long run. You won’t have enough time and energy to take on the ones that probably have a high possibility of succeeding.

Every business-related decision you make comes with its risks. Successful entrepreneurs know how to take calculated risks and assess positive and negative outcomes. Have you mastered the calculated risk-taking skills or are you still working on it? Harappa’s Making Decisions course will help you develop and master calculated risk-taking skills through various easy models and frameworks. Join the course and get going.


Explore topics such as Decision Making, Steps of Decision Making, How to Make Decisions, What is Risk Taking & How to Make Good Judgements from our Harappa Diaries blog section and develop your skills.

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