Who Really Assumes Risk?

"The amount of risk we assume is proportional toThis brings up a point: The degree of risk increases
the responsibilities we accept."the higher you go in the corporate hierarchy.
- Bryce's LawWhether you are cognizant of it or not, as you
Not long ago I was meeting with some softwareassume additional responsibilities in a company,
developers from a small company who expressedthrough a promotion for example, you are also being
their concern about the risk involved with a projectsaddled with additional risks, and your success
they were working on. They weren't so muchdepends on your ability to assume the risks and
concerned about the viability of the project in termsconquer them. Some people rise to the occasion,
of its impact on the company as they were with theothers face the Peter Principle whereby they cannot
potential effect it might have on their professionalrise above their level of competency. Nevertheless,
careers. In other words, they saw this as a high risktrue risk is assumed by the highest echelons in the
project that could affect them for years to come.corporate structure, regardless of the size of
This may be true, but from their description I sawbusiness. And it is this sense of risk that greatly
their risk as minuscule in comparison to what theirinfluences our style of management.
employer was gambling which, frankly, was theWe should also understand the difference between
company's future.taking a risk and being rash in judgment. The two are
This got me thinking about how we perceive risk innot synonymous. I always exemplify it by using a
our professional lives. Most employees perceive risk ingame of Craps as found in a casino; the rash person
terms of how it affects them professionally,simply throws his wager on the table without
particularly as a source of income. In reality, it is thethinking, but the person who studies the game and
employer who assumes all of the risk. If somethingknows the odds before he places a bet is the one
goes wrong, it will be the employer who will be sued,taking the calculated risk. The higher you go up in
not the employee. It will be the employer who has tobusiness, the more you appreciate the need for
deal with government regulators and creditors, notstudying the odds.
the employee, It will be the employer who losesAs any business owner will tell you, employees really
financially and faces bankruptcy, not the employee. Indo not grasp the concept of risk. I think the following
fact, most employees do not appreciate the riskquote pretty much sums it up:
required to simply open the company's doors for"It is not the critic who counts, not the man who
business. Their life is rather simple as compared topoints out how the strong man stumbled, or where
the business owner who agonizes over thethe doer of deeds could have done them better.
company's survival.The credit belongs to the man who is actually in the
Risk is not for everyone, it is for thosearena, whose face is marred by dust and sweat and
entrepreneurial spirits who are not afraid of taking ablood; who strives valiantly; who errs and comes up
gamble; who recognizes both the risks and rewardsshort again and again; who knows great enthusiasms,
for taking it. True risk requires a "Type A" personalitythe great devotions; who spends himself in a worthy
(which we have discussed in the past) who knowscause; who at the best, knows in the end the
how to study variables, calculate odds and return ontriumph of high achievement, and who, at the worst,
investment, and is willing to assume the responsibilityif he fails, at least fails Daring Greatly so that his
for taking it. It is most definitely not for the faint ofplace shall never be with those timid souls who know
heart.neither victory or defeat.