There's a Thin Divide between Boom and Bust; Interview of the Week JUDICIOUS Risk Management Is the Key to Entrepreneurial Success, Says JEZ DAVISON

Article excerpt


WHAT distinguishes a good entrepreneur from a bad one?

The one who makes the most money might look the safer bet on paper. But at what price?

Making money via high-risk, high-reward strategies has been the downfall of many an entrepreneur - including rogue trader Nick Leeson, whose unchecked risk-taking brought down an entire bank.

By betting on the future direction of the Nikkei Index, Leeson initially made huge profits before exposure to massive losses effectively wiped out the 233-year-old Barings.

Hailed as the darling of the City in the boom times, Leeson was suddenly public enemy number one - but surely his strategy was doomed to crack eventually under the strain of stock market turbulence?

While traders can make huge profits quickly, the methods they deploy often expose them to potentially massive losses.

If I had cash to burn, I'd rather protect the investment against big losses even if it meant diminished returns.

Falling down two stairs is likely to hurt a whole lot less than careering down two flights. …


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