Magazine article The CPA Journal

Taking Smart Risks

Magazine article The CPA Journal

Taking Smart Risks

Article excerpt

All of life is a risk of some kind. The issue is not whether to take risks, but rather how to take the right risks for the right reasons in pursuit of the right goals or objectives.

Risks fall into five basic categories:

* The risk that can be avoided simply and completely: the decision that does not need to be made or the gamble that does not need to be engaged in.

* The risk that is unnecessary. An unnecessary risk is when one acts without sufficient information or without taking time to think things through carefully.

* The risk that one can afford to take. Calling on a new prospect, following up on a lead, or exploring a new opportunity are risks that can afford to be taken. The cost of failure is very low, while the rewards of success can be very great.

* The risk that one cannot afford to take. The consequences of making a mistake would be too enormous. One cannot afford to bet the company on a single speculation.

* The risk that one cannot afford not to take. The downside may be costly, but doing nothing is not an option.

People who have achieved a high level of success are intensely realistic. They carefully calculate every possible risk, then think about what they would do should it occur. …

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