"Don't do that, it's too risky."

RISKIn business, people spend a great deal of time and money evaluating risk. It's one of those things they teach in MBA school.

But are we looking at risk in the right way?

According to the American Bar Association, there were 1,143,358 resident and active attorneys in the United States in 2007 (the most recent data I could quickly find). That's over a million people, many of them advising businesses on what to avoid because it is risky.

They lawyers say things like: "Don't let people blog and tweet because they may say something that gets the company in trouble." As I wrote last week, lawyers clamping down is especially true in highly regulated industries.

From the legal perspective, saying "no" might make sense (it avoids lawsuits). But thinking about risk in totality (instead of just what the lawyers think) is saying no the right way to do business? Frequently the businesses and the people saying "yes" to risk are the ones that succeed.

When the perceived risk is low, we tend to do okay evaluating a situation. Yes, it is risky to fly to the business meeting (the plane may crash) but we figure the risk is worth taking.

But when the risk seems high (starting a business or quitting your job to go freelance) we are unable to accurately evaluate the risk.

I think this is because we humans fail to evaluate the risk of staying the course. We don't evaluate the risk in *NOT* starting the business or keeping the job at the big company.

How's that big stable company working out for you?

Perhaps your parents advised you to get a degree from a good university and then work for a nice, stable, well-known company. We're told that is the least risky path. But is it?

If you worked for Lehman Brothers or Washington Mutual or Enron or your company had to downsize or your division was acquired or manufacturing moved to Laos or your boss thought you were too smart and therefore a threat or the company moved to Atlanta or you hit 50 years old or any number of other scenarios - BOOM - you were out of a job. Unemployed.

When you put yourself at the mercy of an employer, you have significant risk. When you work in an industry in decline, you have significant risk.

The flip side of risk

In my experience, people fail to evaluate the risk of taking the opposite course. They look at risk without thinking the problem all the way through.

What is the risk of *not* starting your business this year?

What is the risk of *not* letting your employees communicate via Facebook?

What is the risk of *not* taking a few years off to travel with your rock band?

What is the risk of *not* learning that new skill?

What is the risk of *not* quitting your job and going freelance?

Consider the opening line of this blog post again: "Don't do that, it's too risky."

Maybe the better statement is: "You had better do that, because it's too risky not to."

photo credit: postaletrice via photo pin cc

David Meerman Scott

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