Education

1. NANDHA ENGINEERING COLLEGE
(AUTONOMOUS) ERODE-25
DAPARTMENT OF MANAGEMENT
STUDIES
22BAP02-INDIAN ETHOS SEMINAR-1
TOPIC-TAKING CALCULATED RISK
IN WORK CULTURE
PRESENT BY:
P.S.SANJAY (22BA048)
MBA-1-YAER
2022-2024

2. INTRODUCTION
Calculated risk in business is defined
as, “…a carefully considered decision
that exposes a person to a degree of
personal and financial risk that is
counterbalanced by a reasonable
possibility of benefit.”

3. Objectives Understand the
principles of taking a calculated risk
Understand that weighing up the risks
and the rewards of a new business idea is
an important part of the process of
deciding if it is a viable option,
Appreciate that seeing mistakes is a part
of the process of learning to succeed.

4. RISK MANAGEMENT IS ESSENTIAL
FOR SMALL BUSINESSES
Entrepreneurs are, in part, defined by
their willingness to take risks. Risks
aren’t necessarily things you’re afraid of.
Risks that pay off can lead to increased
revenue, business expansion and more.
But a good entrepreneur doesn’t take risk
without knowing what’s at stake and what
the potential payoff can be. This concept
is called the risk-return tradeoff.

5. EXAMPLE…..
• For most people, thinking about the risk-return
tradeoff will force them to step into an uncomfortable
mindset because people tend to crave security.
However, many entrepreneurs already possess the
personality traits that make them more likely to step
outside of their comfort zone. They tend to be more
excited by the idea of the unknown and therefore
more comfortable with assuming risk. But before
making any decisions, you need to determine your
own comfort level and set it as a benchmark for how
much risk you’re willing to take.

6. How much risk is too much?
• There are a few common pitfalls to calculated
risk.
• One is assuming more risk than you can
manage.
• There isn’t a set number that defines a good
level of risk because it varies from person to
person.
• To determine how much risk is too much for
you, you should start by establishing your risk
appetite, risk tolerance and risk thresholds.

7. CONT…
• Risk appetite: The degree of uncertainty
you’re willing to accept in anticipation of
a reward
• Risk tolerance: How much risk you can
withstand before the reward
• Risk threshold: The point at which the
risk is no longer worth it for the reward

8. Determine risk by conducting a risk
versus reward calculation
A risk calculation is a great place to
start as you determine whether a risk is
worth it. Risk is calculated by dividing
the net profit that you estimate would
result from the decision by the maximum
price that could occur if the risk doesn’t
pan out. Compare the resulting ratio
against your risk tolerance and threshold
to inform your decision.