The Importance of Risk
Posted by Billy on Nov 3, 2009 in Business Theory & Strategy, Entrepreneurship | 0 comments
Risk is an interesting beast. Generally speaking, the goal of each entrepreneur and investor is to mitigate risk to as near zero as possible. The less risk that exists the better, or at least, the less risk you personally must take on, the better. This is a fine policy that any savvy businessperson demonstrates. Interestingly, risk plays an important role when viewed from the macroeconomic perspective. On the micro level, we are all trying to eliminate it, but from the greater macro level, it is an important regulator and guide to innovation and progress. To artificially eliminate risk poses some interesting side effects that ultimately are undesired. Forms of artificial risk elimination would include government policy and intervention, public incentives and credits, promises of government support and bailout, etc. These forms of risk mitigation are immediately accepted by most who are offered but is it really for the best?
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