Risk is an inherent part of any business or even life itself. The success of any organization depends on how it is able to mitigate and manage its risk.

It’s just not enough to assess and know ones risk appetite, it is also important to consider other factors such as:

$ Risk : Reward (Risk Reward Ratio) - What is the forecasted return? The return is the reward for the initiative.

$ The Timing - When should the risk be taken?

$ Building Buffer - 80:20 rule applies here. For example, if your risk taking quotient is 100 you should take the risk upto 80 and the other 20 is the buffer. Navigation (forward movement) is second to survival. Imagine yourself in water, your body constitutes to 80% and the head (including the face) constitutes 20%. You need to breathe to survive, so keep your head in the air.

$ Logical Link – The decisions should be rational. Follow the logical flow.

We have heard that ‘High Risk, High Reward’, then the question is ‘How to Increase the Risk Appetite?’

One of the ways to increase risk appetite is to share the risk. It should also mean to share the rewards appropriately.

The following points will help an organization to increase its risk appetite:

$ Strong Structure – The foundation of the organization should be strong. (a) Best leverage of the network of people in the existing circle. (b) Having a compelling business model and right processes to facilitate. (c) Getting strong board members to provide solid foundation and (d) Getting good advisors which strengthens the structure of the organization.

$ Powerful Partners – Get the right kind of people to invest in right proportions. They should also add great value.

$ Correct Configuration - Bring in committed complementarily skilled people to work together.

These will reduce and minimize the impact of the risk, in other words it will increases the risk appetite and will enable organizations to scale to greater heights.

“You miss a 100% of the shots that you never take” – Wayne Gretzky