What is one risk you took in business? Did it pay off? If so, how? If not, why?
To help you better understand business risks vs. rewards, we asked business professionals and leaders this question for their insights. From quitting your job to taking out business loans, there are several examples of strategic risks that other business leaders have taken.
Here are 14 examples of risks taken in business:
- Taking Calculated Risks
- Earning Extra Money Abroad
- Working With Family
- Starting a Medical Tourism Company
- Becoming a Student Entrepreneur
- Going All Organic
- Taking Out Business Loans
- Trying a Different Career Path
- Launching a Remote Business
- Scaling a Company
- Creating a Personal Brand
- Transitioning to a New Startup
- Investing in Digital Marketing
- Quitting Your Job
Taking Calculated Risks
One thing I learned in interviewing 300+ business leaders about their career paths is that everyone takes risks in business. The difference is that successful business leaders take calculated risks. As one interviewee put it, “a lot of spreadsheets have gotten me to where I am today.” When the best- and worst-case outcomes can be validated through a calculation, the risk transforms into a logical next step.
Brett Farmiloe, Markitors
Earning Extra Money Abroad
I have played tennis most of my life and worked as a tennis instructor as my side job in my home country in Poland. When I went abroad to study marketing in Germany, I decided to start my own tennis business there to earn extra money for my student expenses. It was a risky decision because of the language barrier and all the legal requirements I had to follow to be a self-employed worker in Germany.
Even though it was challenging at first, I’m very grateful for that experience. Not only did I improve my language and build meaningful relationships, but I also strengthened my self-confidence. During that time, I learned that I could do things that I had never considered before. Now, I know that most limits are only in our heads, and we can achieve things if we only give ourselves a chance to pursue our dreams and passions.
Dorota Lysienia, LiveCareer
Working With Family
Working with loved ones can be a risk, as this does not always work out. Fortunately, I have been able to work with my husband as he is the COO of my skincare clinic. I have a background as a nurse practitioner, and he is a CPA.
Due to the fact that we bring very different kinds of expertise to the business, we’ve worked out a situation where our skill sets do not overlap too much. At the same time, these skill sets are both very important for the growth of the business.
Maegan Griffin, Skin Pharm
Starting a Medical Tourism Company
I left the Army in 2019 to start my medical tourism company. It was a big risk to leave the career path offered by the military. But since I began working on the business full time in March 2020, we have built a network of 17 medical providers in three countries, and we have facilitated major surgical procedures for our first patients. Now, the company is growing, hiring, and helping people save big on their medical care.
Wesley Jacobs, Apollo Medical Travel LLC
Becoming a Student Entrepreneur
Our business was a risk in the beginning. We got started as three students with no experience, putting all our savings into our first business investment: a photo booth. Then, all earnings from the first one went into the second one, the third one, and so on.
There was no promise of success, just working day by day. Now I look back and see that our persistence and patience paid off. Today we employ around 50 talented people, and we are international leaders of passport photo processing. Starting the business was the most significant risk, but the greatest reward!
Tomek Mlodzki, PhotoAiD
Going All Organic
As a bug repellant, it can be very difficult to become 100% organic in this space. A majority of repellants use harsh chemicals to ward off insects, and organic is viewed as not as effective.
We were able to create a very effective repellent while still being organic and safe to the environment, plus help change the image that organic repellents have. It has definitely paid off, and we are working on adding more products to our line.
Michael Jankie, Natural Patch
Taking Out Business Loans
I had just started my first business and knew capital was important to build a successful team. I took out a loan before I even purchased my first home. It was risky, but I believed in my business so much without a doubt, I knew I would pay it back within two years.
That is what I did exactly. I sit here today 25 years later with the same business still profitable and recognize the value of a business loan and make sure to get one for each new business I start.
Galit Ventura-Rozen, Empowering U
Trying a Different Career Path
My degree was in industrial design. Before founding my company, I had never worked in the mental health space. However, I had a passion for providing accessible therapy to others, which stemmed from personal challenges with this issue. My drive to provide a better experience with mental health services for others paid off, and I’m now able to provide online talk therapy to people who are struggling.
Mike Clare, Mood Health
Launching a Remote Business
I started my business and made it remote even before the rest of the world did. It has definitely paid off to start my fun-loving custom pet goods brand. It has been very well-received. We are dedicated to helping pet owners express their love, adoration, and sometimes even their obsessiveness with their beloved pets. I’m also happy to see the rest of the world moving to more remote work even though it took a pandemic to force it on us.
Adam Reed, Crown & Paw
Scaling a Company
One risk we took in business was scaling our company. Scaling our business required a huge upfront investment to hire more employees, develop our product, and produce our product at scale. This was a huge risk, and fortunately, so far, it has paid off.
We see a huge demand for our product, and it is propelling our business to grow very rapidly. At the time, we were worried we were trying to grow our business too quickly, but I think this concern helped us scale our resources to the perfect amount to scale at a rate that was meeting demand.
John Wu, Gryphon Connect
Creating a Personal Brand
As a CBD hemp oil extract business, I initially created my company because my mother had a difficult and tumultuous bout with cancer. As I processed and worked through my own emotions with her diagnosis, the prospect of creating a business dedicated to decreasing the pain of individuals everywhere became an obsession. Such an obsession is why the business exists today.
With that being said, creating a business that is so intrinsically tied to a personal issue is extremely risky. It blurs the line between work and life, creates a subjective perspective that is difficult to separate from, and initiates difficult boundaries that are at times difficult to navigate.
However, I am very happy that I chose my path. My company has helped countless individuals and continues to inspire others to find organic and natural ways to deal with their own health concerns.
Inesa Ponomariovaite, Nesa’s Hemp
Transitioning to a New Startup
After two years of salary stagnation, I left my comfortable, stable job with a 60-year-old company. I became a director at a two-month-old startup, and to my surprise, every startup stereotype was true. Did the switch pay off financially? Yes. But I missed having a predictable workday. And I really missed having a large, comfortable, private office.
Karen Zachary, Anchor Virtual Assistants
Investing in Digital Marketing
When I arrived at my company, I immediately proposed investing heavily in digital marketing. All home services have been slow to adapt in this way and still are. The reason is that all home services, including ourselves, have always relied on word-of-mouth as the foundation for bringing in new business.
Our digital marketing was slow going at first, but our digital ROI continues to increase each year, and we continue to acquire business that would have been missed without taking the leap.
Charles Leduc, Mold Busters
Quitting Your Job
Without any backup plan in place, I left a very comfortable salary and my employer’s health insurance plan. The global death toll was approaching 2 million, and over 10 million Americans were jobless, trying to survive under record-breaking unemployment rates economically.
My family thought I was crazy, but it became abundantly clear that time is precious, possessions are temporary, and I could no longer spend another second enslaved to a job that consumed my entire life.
I took a bet on myself, sight set on the passions that spark my fire. Shortly after saying “Sayonara!” I landed on my feet and significantly advanced my career in a company that actually cares about me as a person, performing meaningful work I enjoy and excel at.
Kaelee Nelson, Pawlicy Advisor
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What are some examples of risk-taking in business? ›
- Leaving a full-time job and steady paycheck.
- Using personal savings with no guarantee of a return on investment.
- Misjudging interest in a product or service.
- Putting trust in coworkers.
- Giving away time, energy, sleep, the ability to enjoy personal interests, etc.
Examples of Risk-Taking Behavior
Criminal activity such as stealing, vandalism, or trespassing. Driving under the influence of drugs or alcohol. Engaging in dangerous driving, such as street racing or texting while driving. Engaging in extreme sports that have a high risk of injury or death.
Risk-taking in entrepreneurship is the process of identifying, evaluating, mitigating, and trying out potential opportunities and strategies that may help you build or grow your business but could also lead to personal or professional loss.Why is risk-taking important in business? ›
Those who take risks already have a competitive advantage
Since most people tend to avoid risk, those who are brave enough to take risks already have a competitive advantage. Similar to the concept of a first-mover advantage, when most individuals stay away from risk, that means less competition for risk-takers.
- Physical risks. Physical risks include physical discomfort, pain, injury, illness or disease brought about by the methods and procedures of the research. ...
- Psychological risks. ...
- Social/Economic risks. ...
- Loss of Confidentiality. ...
- Legal risks.
- Talent risk.
- Geopolitical risk.
- Information security.
- Resilience risk.
- Third-party risk.
- Conduct risk.
- Climate risk.
- Regulatory risk.
ergonomic - repetitive movements, improper set up of workstation, etc., physical - radiation, magnetic fields, pressure extremes (high pressure or vacuum), noise, etc., psychosocial - stress, violence, etc., safety - slipping/tripping hazards, inappropriate machine guarding, equipment malfunctions or breakdowns.What is a simple example of a risk taker? ›
Risk takers know something bad can happen, but they don't worry about it. A skydiver—a person who jumps from an airplane as a sport— is an example of a risk taker. Of course, it can be dangerous to jump from an airplane. But a risk taker enjoys this type of danger.What are the four types of risks in business? ›
- strategic risk - eg a competitor coming on to the market.
- compliance and regulatory risk - eg introduction of new rules or legislation.
- financial risk - eg interest rate rise on your business loan or a non-paying customer.
- operational risk - eg the breakdown or theft of key equipment.
Widely, risks can be classified into three types: Business Risk, Non-Business Risk, and Financial Risk. Business Risk: These types of risks are taken by business enterprises themselves in order to maximize shareholder value and profits.
What are the best risks to take? ›
- Break the Mold.
- See the World.
- Consider a Job Change or Transfer.
- Start Saving.
- Take a Class.
- Pursue Your Passion.
- Stand Up for Yourself.
Taking risks can change you fundamentally. They make you braver, stronger, and more confident. They show that you have what it takes to make a decision, commit, and create the life you want. You build faith in yourself knowing you have done it before and can do it again.What is the most important business risk? ›
Rank 1: Cyber incidents
Cyber risks, such as IT outages, ransomware attacks or data breaches, rank as the most important risk globally (34% of responses) for the second year in succession – the first time this has occurred.
Taking risks eliminates the possibility of looking back and asking, "what if?" Even if you fail, you'll walk away with more experience and more knowledge, which can lead you to further success in other areas and at least one study shows that risk takers end up more satisfied with their lives because of it.What are 10 risk factors? ›
- smoking tobacco.
- drinking too much alcohol.
- nutritional choices.
- physical inactivity.
- spending too much time in the sun without proper protection.
- not having certain vaccinations.
- unprotected sex.
- Create and protect value. ...
- Be integral to your process. ...
- Be part of decision making. ...
- Explicitly address uncertainty. ...
- Be systematic, structured and timely. ...
- Be based on the best available information. ...
- Be tailored.
- Economic Risk. A low unemployment rate is a good thing. ...
- Project Risk. Project Managers manage the risk that a project is over budget and the positive risk that it is under budget. ...
- Supply Chain Risk. ...
- Engineering Risk. ...
- Competitive Risk. ...
- Technology Risk.
Business risk usually occurs in one of four ways: strategic risk, compliance risk, operational risk, and reputational risk.What are the the top 3 risks facing the company? ›
- Companies face a variety of business risks that can threaten their ability to achieve their goals if these risks are not monitored and navigated properly. ...
- Financial Risks. ...
- Compliance and Legal Risks. ...
- Cybersecurity Risks. ...
- Operational Risks.
While the types and degree of risks an organization may be exposed to depend upon a number of factors such as its size, complexity business activities, volume etc, it is believed that generally the risks banks face are Credit, Market, Liquidity, Operational, Compliance / Legal /Regulatory and Reputation risks.
What are the 6 risk factors? ›
3.2, health risk factors and their main parameters in built environments are further identified and classified into six groups: biological, chemical, physical, psychosocial, personal, and others.What are 3 examples of natural risks that a business has to deal with? ›
Risks that result from changes in overall business conditions. Natural risks * are caused by natural occurrences, such as hurricanes, droughts, and earthquakes. They can result in property damage or business closures during or after natural disasters.Are you a risk taker any example? ›
In my personal life I prefer to play it safe, but when it comes to professional decisions, I have taken a significant amount of calculated risks that have paid off. A great example of that is when I started my own business, which is sucessful so far. I would say that I am a risk-taker.How do you answer risk interview questions? ›
- Consider the company. Before preparing your response to what your biggest risk is, research the company and its values. ...
- Select an example. ...
- Mention the risk involved. ...
- Explain your thought process. ...
- Share the results that occurred.
- Financial risk. Financial risk is the danger your business faces of losing money on a bad investment or of your business struggling to manage debt and make payments. ...
- Strategic risk. ...
- Reputational risk. ...
- Liability risk. ...
- Business interruption risk.
Known known risks are the risks we know about and we also know how big they are. For example, an organization may know that there is a risk of them losing some of their customers to a new competitor, and that they risk losing 10% of their customers. The organization knows the risk exists and can quantify it as well.What is the most common type of risk? ›
- Cost Risk. Cost risk is probably the most common project risk of the bunch, which comes as a result of poor or inaccurate planning, cost estimation, and scope creep. ...
- Schedule Risk. ...
- Performance Risk. ...
- Operational Risk. ...
- Technology Risk. ...
- Communication Risk. ...
- Scope Creep Risk. ...
- Skills Resource Risk.
- Risk acceptance.
- Risk transference.
- Risk avoidance.
- Risk reduction.
Positive risk taking is a process which starts with the identification of potential benefit or harm. The desired outcome is to encourage and support people in positive risk taking to achieve personal change or growth. Positive risk management does not mean trying to eliminate risk.How do you successfully take risks? ›
- Develop a system for assessing risk. The first place to start when weighing a big risk is to write out a list of all the pros and cons. ...
- Move past the fear of failure. ...
- Think about the upside of change. ...
- Find ways to take on incremental risk. ...
- Seek out advice from calculated risk-takers.
What is a daily life example of risk? ›
A driver is approaching a yellow light and must choose to brake in order to stop in time for the light to turn red or to accelerate to make it through the light before it turns red. If the driver accelerates, he is risking going through the light which could result in an accident or a ticket.How does taking risks build confidence? ›
And ultimately, each time you see yourself take a risk and move through an obstacle or setback, you build confidence in your ability to do so, and this helps you overcome the fear of failure. By taking risks, you give yourself the opportunity to learn, to grow, to test your limits, and to see what you are capable of.What makes a person a risk taker? ›
A risk-taker is someone willing to take a leap and willing to fail. A risk-taker is a rule breaker, change maker, disruptor. The status quo is not good enough. Entrepreneurs take risks: calculated risks.What drives people to take risks? ›
Overconfidence in abilities – One of the most common reason for individuals taking risks at work can come down to overconfidence. When an employee has been doing a job for a long time, they can become accustomed to their task. Over familiarity can lead to problems when an incident outside of their remit occurs.How do you manage risk in a business? ›
- Decide what matters most.
- Consult with stakeholders.
- Identify the risks.
- Analyse the risks.
- Evaluate the risk.
- Treat risks to your business.
- Commit to reducing risk.
Business risk is the possibilities a company will have lower than anticipated profits or experience a loss rather than taking a profit. Business risk is influenced by numerous factors, including sales volume, per-unit price, input costs, competition, and the overall economic climate and government regulations.What is the goal of risk? ›
Essentially, the goal of risk management is to identify potential problems before they occur and have a plan for addressing them. Risk management looks at internal and external risks that could negatively impact an organization. Typically, risk management teams break their risk management plans down into four parts.Why do we value at risk? ›
Value-at-risk is a statistical measure of the riskiness of financial entities or portfolios of assets. It is defined as the maximum dollar amount expected to be lost over a given time horizon, at a pre-defined confidence level.What is the main purpose of risk? ›
The purpose of risk management is to identify potential problems before they occur so that risk-handling activities may be planned and invoked as needed across the life of the product or project to mitigate adverse impacts on achieving objectives.What are three positive examples of risk taking? ›
- Sports: rock-climbing, mountain biking, martial arts, competitive team sport like basketball or football, or performance sports like dance or gymnastics.
- Arts: joining the school play or band.
- Volunteering: getting involved in a social or political cause, running for a school committee.
What is the most common risk faced by a business? ›
A company's reputation is its single, most important asset. This is particularly important for small businesses because they need to create a good reputation in order to grow: if nobody has heard of your organization or only knows bad things about it, they're not likely to become a customer.
The most common high-risk behaviors include violence, alcoholism, tobacco use disorder, risky sexual behaviors, and eating disorders.What are four examples of common risk responses? ›
Since project managers and risk practitioners are used to the four common risk response strategies (for threats) of avoid, transfer, mitigate and accept, it seems sensible to build on these as a foundation for developing strategies appropriate for responding to identified opportunities.What are the 3 types of risks? ›
Types of Risks
Widely, risks can be classified into three types: Business Risk, Non-Business Risk, and Financial Risk.
- Systematic Risk.
- Unsystematic Risk.
- Regulatory Risk.