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Risk Averse or Risk Managed?

When it comes to successfully confronting risk, the difference is in the approach. As in golf, one has two choices – to close one’s eyes and take a whack, or to understand all the risky conditions involved in the act of golfing. Chris Matts has some incredible advice relevant to risk. Read closely, and you will benefit immensely!

Risk Averse

There are two approaches to risk. One can either manage risk, or be risk averse. Risk averse means ignoring risk by pretending it doesn’t exist, or by hoping that risk can be externalized on someone or something else. In our lives and in business, risk is as present as the air we breathe. There’s no use in ignoring it, and to think it can be externalized will only delay the inevitable, since all people and businesses are in various ways connected:

The irony is that people who intend to be risk averse engage in very risky behaviour. When risk averse individuals take risks, they gamble. They make big bets and they take a punt. They ignore the risk and hope that everything will turn out OK. Sometimes it does, often it doesn’t. Managers get promoted because they are lucky. In fact, in a risk averse culture, the way to get ahead is do nothing and wait for those who do try something special to fail.

Managed Risk

It seems like funny logic, but again, being risk averse is like hacking away at a golf ball with your eyes closed. Managing risk means being aware of the risk that surrounds every decision, and taking steps to mitigate that risk. Risk mitigation may take several forms, including doing nothing (probably not the best idea), monitoring, making the risk transparent, hedging the risk, asking an expert to manage the risk, ‘selling’ the risk, or ‘buying insurance.’

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About Eric Anderson

Eric Anderson is a staff writer for CAI’s Accelerating IT Success. He is an intern at Computer Aid Inc., pursuing his master’s degree in communications at Penn State University.

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