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Taking Risks During Risky Times

August 10th, 2020

By: Annemarie Cutruzzola

A graphic that reads "Caffeinated Innovators Recap: Taking Risks During Risky Times" with a screenshot from the event

Last Friday, our community discussion was all about taking risks – particularly during risky times. Taking risks is a big part of entrepreneurship, but right now the stakes are even higher due to the uncertain circumstances of COVID-19. So we asked our community members on the call: should entrepreneurs be risk-averse right now, or is it a good time to try something new with their business? How can we redefine what risk-taking means during the pandemic?

Our discussion began with the observation that the word “risk” has taken on a different meaning, or at least has different connotations, during the time of COVID-19. The word is used so often when talking about the pandemic – who is at a higher risk of catching the virus? Which activities are high-risk or low-risk? Those who don’t follow public health guidelines are seen as putting others at risk. So did the practice of avoiding risks in terms of public health trickle over to business and entrepreneurship?

Risks and COVID-19

During a time of uncertainty, people might gravitate towards safer choices, choosing to control the situations they can while navigating the pandemic, which they can’t control. Many people were thrust into survival mode when the pandemic hit – “essential” is another word that was given new meaning. The pandemic has the potential to impact many areas of one’s life, such as health, financial and job stability, mental health, relationships, and living situations. Uncertainty will always be inevitable in risk-taking, but the degree of uncertainty brought on by this pandemic can make risk calculations even more difficult. That explains why people may be inclined to “ride out the storm,” and consider taking risks when life is more stable.

However, others may see this situation as the perfect time to take a risk. While it has definitely brought hardships to many businesses, the pandemic also created lots of opportunities, like the rise of e-commerce and video conferencing platforms. New consumer needs were created, and entrepreneurs stepped up to find new ways to fill them. As we deal with the long term effects of the pandemic, there will only be more needs, and we need entrepreneurs willing to take the risks to fulfill them.

Many factors can influence your risk-taking decisions – including context, surroundings, and the people around you. Depending on if your support system is mainly a risk-averse group or mainly a risk-taking group, your tendencies towards taking risks can lean one way or another. In entrepreneurship, there can be lots of external pressure in favour of taking risks. No matter how easy or necessary others make it look, it’s important to look internally when deciding whether or not to take risks.

Should I Take the Risk?

So if you’re considering taking a risk, what should you do? Deciding whether to take a risk goes beyond simple calculations. It’s both a science and an art, and there are many factors to consider. Here are some of the main points brought up in our conversation:

  • Research, preparation, and planning are essential. Being informed about the risk you're taking will help you better manage the possible outcomes.  
  • Consider the worst-case scenario. If it happens, will you be ok? Is taking the risk worth it when you consider this possibility?
  • Think about the size of your risk. Is it possible to take a smaller risk first, evaluate the outcome, then take the bigger risk?
  • Be prepared for negative outcomes, but also don’t let failure define your outlook on risk-taking in the future.

It’s also important to remember that everyone has different risk profiles, and depending on a variety of factors, you’ll have more or less bandwidth for taking risks at different times in your life and the circumstances you’re in. Your risk calculations should account for your personal capabalities as much as the circumstances of the risk itself.

If you missed the conversation, don't worry! We host Caffeinated Innovators every Friday at 9:15am on Zoom. Register here (external link)  to attend an upcoming discussion.