PDF The Timid Corporation: Why Business is Terrified of Taking Risk

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But because I have a doctorate in developmental psychology, I am also concerned that we are keeping our kids too safe. Preventing our kids from exploring uncertainty could have unintended negative consequences for their health and development, such as increased sedentary behaviour , anxiety and phobias.

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They also worry that someone is going to report them to the authorities for letting their child take risks. These worries make it hard for them to let go and can result in over-protection.

ISBN 13: 9780470843680

They want to know how they can help their child take more risks in play. This concerns me as much as over-protection. How will children learn about themselves and how the world works if an adult is constantly telling them what to do and how to do it? The likelihood of dying from an injury is 0. Car crashes and suicides are the leading causes of death, not play. In fact, children are more likely to need medical attention for an injury resulting from organized sports than play.

Likewise, the likelihood of abduction by a stranger is so small that the statistics are not even collected. In an attempt to strike a balance, injury prevention professionals are moving to an approach that seeks to keep children as safe as necessary, rather than as safe as possible. Risky play is an important part of many outdoor schools and early child care settings in Canada and other parts of the world.

In outdoor forest schools and nurseries in the U. Students were allowed to climb trees, build forts, ride bikes — whatever occurred to them. We just have to open our eyes and be willing to see what is in front of us. Your browser is currently not set to accept cookies.

Taking Risks In Life And How To Taking Risks - Qasim Ali Shah

Please turn this functionality on or check if you have another program set to block cookies. Your web browser either does not support Javascript, or scripts are being blocked. Please update your browser or enable Javascript to allow our site to run correctly. To give you the best possible experience this site uses cookies. Using this site means you agree to our use of cookies. View cookies policy. The first is loss aversion , a phenomenon in which people fear losses more than they value equivalent gains. The second is narrow framing , in which people weigh potential risks as if there were only a single potential outcome—akin to flipping a coin only once—instead of viewing them as part of a larger portfolio of outcomes—akin to flipping, say, 50 coins.

Consider a simple example of a risk-averse manager 5 5. If we were to ignore the time value of money, we would expect a risk-neutral manager to be indifferent to the project—because the potential gains are equal to the potential losses. In other words, the upside would have to be about 70 percent larger in order for that manager to overcome his or her aversion to risk.

The Timid Corporation : Ben Hunt :

But what if we were to pool these risks across multiple projects? If the same manager faced not 1 decision but 10, the story would change. In other words, pooling risks leads to a striking reduction in risk aversion. Many of the managerial tactics used by companies in their capital-allocation and evaluation processes fail to take note of these basic behaviors.

As a result, many companies wind up with risk aversion at the corporate level that resembles that at the individual level—squandering the risk-bearing advantages of size and risk pooling that should be one of their greatest strategic advantages.

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In fact, many companies seem to exacerbate loss aversion, which is the primary driver of risk aversion. Companies can reduce the effects of risk aversion, where appropriate, by promoting an organization-wide attitude toward risk that guides individual executive decisions. More specifically, companies should explore the following:.

Up the ante on risky projects. Risk-averse organizations often discard attractive projects before anyone formally proposes them.


To encourage managers and senior executives to explore innovative ideas beyond their comfort levels, senior executives might regularly ask them for project ideas that are risky but have high potential returns. They could then encourage further work on these ideas before formally reviewing them. They could also require managers to submit each investment recommendation with a riskier version of the same project with more upside or an alternative one. Consider both the upside and downside. Executives should require that project plans include a range of scenarios or outcomes that include both failure and dramatic success.

Doing so will enable project evaluators to better understand their potential value and their sources of risk. These scenarios should not simply be the baseline scenario plus or minus an arbitrary percentage.

Overcoming a bias against risk

Instead, they should be linked to real business drivers such as penetration rates, prices, and production costs. They should also look at a scenario or two that captures the typical experience of product introductions, as well as one scenario where it flops. By forcing this analysis, executives can ensure that the likelihood of a home run is factored into the analysis when the project is evaluated—and they are better able to thoughtfully reshape projects to capture the upside and avoid the downside.