"Risky Business" By Cheryl Dahle, Fast Company, July/August 1999, By Mary Krentz

At 50 years old, Ron Dembo is the president and CEO of Algorithmics Inc., a leading authority on managing risks in business. "Risk Watcher" and "Risk Mapper" are among the powerful software applications his company sells to banks, insurers and large corporations, who need help measuring and managing their financial risks. Dembo gave up a professorship at Yale University to take a risk to launch his company. His risk paid off big.

"The world is much riskier today," explains Dembo, "because everything is much more interconnected." He offers an intriguing look at navigating the risky new world of business: Don't get comfortable in basing your business strategies for the future on the past. People are too often caught off guard with risks they didn't anticipate. Dembo warns business people to not think about the future in terms of a single scenario. He believes there isn't such thing as "the future." The future could be made up of many different scenarios, some good and others bad. It's crucial to be prepared for both. Most business people have a hard time thinking about bad scenarios.

Dembo encourages people to think about "regrets" when making a big business decision. He defines regrets as being sensitive to specific circumstances, and something that adds a psychological factor to choices. For example, some entrepreneurs mortgage their homes; however, for others the risk of losing their home is too traumatic. On the other hand, I'm sure you have all heard of people who buy a lottery ticket each day, playing the same number. Spending a dollar to buy a lottery ticket offers cheap insurance against the regret they would feel if their number won and they hadn't purchased a ticket.

Are you a risk taker? I'm amazed at the number of people who go through life seldom ever taking a risk. Often, this results in being stuck in a dead-end job. I spoke to an Economic Development Director, who frequently deals with people who have great sensible business ideas; however, they become too comfortable in their current job to take the risk of losing the stability offered by it. The truly sad thing about this is that many of these people don't look forward to getting up in the morning and going to work. They do the same thing day in and day out, rarely using their creative ability or skills. They literally count the days until they can retire. Unfortunately, the thought of taking a risk is too frightening.

A few years ago, my husband was faced with the decision whether of not to start his own carpentry business. He had been working for a construction company for nearly ten years. Over the years, he considered starting his own business on several occasions; however, he was afraid of the many unknowns. There were numerous risks to consider. He is a person who avoids taking risks whenever possible. After considering all the scenarios, good and bad, he decided to quit his job and explore this new business venture. Four years later, he continues to work as a licensed building contractor and thoroughly enjoys the freedom of business ownership. In this case, the rewards outweighed the risk.

Life is full of many risks. Think about how risk-taking fits into your everyday work and your family life. Who might be affected by the risks you take? I hope this article gives you some new things to consider when faced with decisions involving risk.

-- Anonymous, March 08, 2000