Risk is a duel-edged sword. There is, occasionally, no telling what will come out of taking a risk. However, with some planning and preparation, you can take most of the uncertainty out of risks and benefit from the tremendous upsides!

In business, risk is a necessary evil. There is no business that has been created that has not had to place itself in risky situations. As people who dislike ambiguity and risk, we often assign more emphasis on avoiding bad situations than we do on pursuing positive and groundbreaking revelations in our businesses.

This is natural and normal! Being risk-averse is simply the willingness to avoid what is new and uncomfortable, however, there is an inherent issue with this as described by P.T. Barnum.

“Comfort is the enemy of progress.” – P.T. Barnum

This is absolutely true. In my book The Potential Dichotomy: The Philosophy of a Fulfilling Life, I mention a thought process called the “baseline of fear”. Essentially, this thought process describes the way in which we become desensitized to things which were once frightening, but that we have become accustomed to through consistent practice.

For example, the first day at your new job was probably frightening. But over time, you became accustomed to the pattern and have stepped up the baseline of fear by performing new things in new ways. Once you step up the baseline, that becomes your new “comfort” level.

People who never stop stepping up the baseline become the high-achievers and go-getters in life. They become the Steve Jobs and Bill Gates of the world. They actively decide never to let themselves become comfortable by constantly pushing themselves to improve.

This is where risk comes into play. Every uncomfortable situation is deemed a risky one by our brains. We usually always feel that we have something to lose in these situations.

The key is in recognizing true risk from our own inflated and biased versions of loss. That is how we can get ourselves to take the next steps logically and move past our comfort zones.

So, without further ado into the world of risk, consider the following 5 reasons why risk is beneficial to you and your business ventures!

1. Blow Past the Fear of Failure

Failing forward is about LEARNING from mistakes.
Failing forward is about LEARNING from mistakes.

I often describe the fear of failure as a self-fulfilling prophecy. Why? Because in my time of coaching and getting to know other people, the fear of failure is the single most prominent and undeserving fear that halts you from living the life you truly desire.

And let’s face it, not living the life you truly desire is failure, isn’t it?

In terms of business, people set pretty lofty and enthusiastic goals for the future. These goals, more often than not, require a level of growth and risk to achieve. By consistently placing yourself out of your comfort zone, and taking on calculated risk, you can achieve these goals and prioritize taking action.

Failure is interesting. Consider the following passage from my book (The Potential Dichotomy) on the socratic reasoning for failure…

You can choose never to fail again. That’s right, I said it. You can CHOOSE never to fail again! How? Let’s use a little Socratic reasoning that I use in my presentations to make my point.

I begin with the original question…
“What do we have to lose by pursuing our goals relentlessly and with accountability?”
I often get this answer…
“We can fail.”
Then I ask…
“Well, what is failure?”
To which I receive…
“When you try something and do not succeed.”
Quickly this circular thinking is getting nowhere, I then change the focus to improvement…
“Well, if you were to try again and did succeed, would you still be considered a failure by yourself or others?”
Communally they accept you are not, this is not the point I try to make, it is simple and provides no perspective with which to make useful changes in their lives, so I ask…
“Well if you can fail, and still succeed, is it really a true failure?”
They normally reply that it is not…
“then what is a true failure?”
The group often provides that it is the inability to succeed
“What would make you unable to succeed? Why could you not succeed at any point?”
They often provide an answer that has to do with personal limitations, feelings, and beliefs in what they perceive is impossible.
“Haven’t I proven that perceptions can be changed on a moment’s notice? That emotions are only a result of our chosen thoughts?”
They agree.
“Then that cannot be the answer. There is one factor alone that can cause true failure, what is it?”

As they begin to format the perspective in their minds, they will either present to me that it is a lack of the ability to try again or the absence of one of the Three Principles of Self-Actualization (click HERE! to learn more). Bingo. I then begin to explain that failure is not a true failure in the way we perceive it. Failure can actually give us the potential that becomes success, even more potential than we have started with, through a refinement in our learning! You now know what doesn’t work and can adjust your approach!

As you can see, logically reasoning out failure as nothing more than your inability to try something again is a great way to make this critical point: FAILURE ONLY EXISTS WHEN YOU BELIEVE IT DOES.

2. Risk Doesn’t Mean a Lack of Control

It is our mind’s ability to place undue connotations on things to avoid ambiguous denotations. In terms of risk, many people view risk as the lack of control or “throwing control to the wind.”

This belief is entirely untrue and unjustified. Any businessman should know that risk is inevitable, but, can be managed well and in a way that sways the probability of success to your side!

Risk-management is an entire factor in proper leadership, after all. And one of the most debilitating beliefs in an organization is the belief that risk means releasing control.

Risk simply means that there is more of a possibility of negative consequence, it has nothing to do with your lack of control over an organization. Most great leaders, in fact, take more control over the organization when taking risks, so that they can better guide their business through any issues or potential speedbumps on the road to a beneficial future.

If there is one point I want to make about risk in life and business, it is this: Taking risk haphazardly will not benefit you. Taking risk with intention, analysis, and preparation, will benefit you.

There is a saying in the stock market, “It’s only gambling if you don’t prepare.”

Risk only seems to be a gamble when a person does not adequately prepare for it. The stock market seems like gambling to people who lose, all because they didn’t prepare, or because they didn’t do their due diligence.

Warren Buffett is living proof that what is normally seen as “gambling” can be prepared for adequately. True gambling should have an average 50% win rate, right? Then why does Warren Buffetts portfolio grow at an average of 20% a year?

Warren Buffett is no stranger to risk, but he is also no stranger to knowing what is in his control before taking on risk. That is why he succeeds.

3. Success is TIED to Risk

Success is tethered to risk by a rope. You cannot have one without the other. Jen Sincero says, “You can have your comfort or you can have success, you can’t have both.”

Ultimately, this is absolutely true. Risk is a necessary evil because it directly relates to your ability to succeed. But, like I mentioned earlier, success only comes when you take control of what you can before implementing risk.

How do you plan to grow as an organization without taking calculated risks along the way? How do you plan on growing as a person without being able to push yourself out of your comfort zone and do the difficult things? You can’t.

Only when we become willing to accept risk as the necessary medium for success to occur can we implement growth. As a change-management and leadership consultant, allow me to explain the nature of risk in organizational change with the hopes of creating a beneficial future.

There is a blog post I wrote on what is called a Productive State of Disequilibrium. Essentially, this is the necessary state of an organization that wishes to unglue itself from comfort and encourage growth. The process is as follows…

Step 1. Unfreeze
Step 2. Shift
Step3. Re-freeze

That’s really it. The way you go about it, however, is extremely important for encouraging growth. Success comes when you manage the risk and move yourself into the productive state of disequilibrium. In doing so, you will perform the unfreezing, shifting, and re-freezing process to solidify growth within your organization.

There can be no success or forward movement without the risk to accompany it!

4. Risk-Taking Shows Confidence

Confidence is the assuredness you have of your own power to make a difference and face adversity.
Confidence is the assuredness you have of your own power to make a difference and face adversity.

Whether having confidence is a major concern for you or not is irrelevant. You are a leader, no matter what hierarchical tier of a company you operate in. It’s a simple question: Would you rather follow a confident leader or a timid one?

My bet is that you would follow a confident leader. Confident leaders are those who can inspire others in an organization through courageous and calculated risks. Confident leaders are sure of themselves and their ability to handle diversity, and in being so sure, they give others the strength to operate with confidence as well.

Confident leaders have a way of shifting organizational culture. They recognize the importance of risk and their ability to take control.

They also recognize the importance of failures as learning experiences, and in that way, they are less likely to punish people for failure and, rather, enforce the learning experience inherently found in failure instead.

Doing this is a great way to build organizational trust, and a culture of innovation. Why? Well, due to the psychological safety that becomes inherent in any organization that values learning as opposed to perfection, employees become willing to take risks, speak their mind, offer differing and informative opinions, and move the organization forward by taking risks themselves.

Why wouldn’t any organization want to include its employees in this way? Why wouldn’t this inherent feeling of security, autonomy, and engagement be beneficial to any organization on the planet? There is no answer. Because it is beneficial to any and every organization on the planet.

5. Capitalize on Unforeseen Opportunities

As we know, taking risk is a necessary part of success and growth. But this happens in far more than one way. Due to the inherent ambiguity that there is in risk, there lies the possibility for opportunities and professional growth that you may have never expected!

Despite whether you are prepared or not for these beneficial opportunities, they make themselves apparent through the movement that an organization accomplished through risk.

Your ability to accommodate and capitalize on these unknown opportunities will test your organization’s adaptability, and your willingness for success. Ultimately, they are the unforeseen and unexpected opportunities that you now have the option to pursue through your risk taking.

I don’t think that it is any secret that one thing leaders love is having options. Options allow organization leaders to weigh the good and bad, prepare, and choose, the best path for their organization.

Recently, I’ve been working with the brilliant CEO of a tech organization who wanted to increase workflow and productivity. Unforeseen opportunities became apparent through the changes we had implemented! These opportunities allowed the CEO to 1) establish more trust and clarity of vision within his teams, 2) increase his leadership abilities through recognizing important workflow bottlenecks, and 3) recognize that he has plenty of options for becoming more profitable in the near future due to the security and strength of his team-members.

Risk often causes us to analyze and recognize opportunities that were once hidden. Make the best use of them as you can!

Conclusion

Risk is necessary for success, that’s all that should be said.

Perhaps the true question is not, “How can I manage more risk?” but rather “How can I be more driven for success?”

Ultimately, your ability to move your organization (or life) forward lies in your ability to prepare and manage risk in times of change. That is the only way to avoid the “gambling” nature of unprepared risk, and ensure you and your organization benefit for years to come!

Thanks for reading!
Work With Austin!

-Austin Denison is a change management consultant from Southern California and founder/CEO of Denison Success Systems LLC. He is the author of The Essential Change Management Guidebook: Master The Art of Organizational Change as well as The Potential Dichotomy: The Philosophy of a Fulfilling Life.