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Dr. Helen

The Risk Advantage

January 28th, 2014 - 5:59 am

the_risk_advantageI am reading a new book by Tom Panaggio entitled The Risk Advantage: Embracing the Entrepreneur’s Unexpected Edge. Panaggio is and entrepreneur and was a race car driver who:

… has learned that you cannot avoid risk if you want to be a winner. In The Risk Advantage, Panaggio tells the story of how he and his business partners built two thriving companies: Direct Mail Express (which now employs more than 400 people and is a leading direct marketing company) and Response Mail Express (which was eventually sold to equity fund Huron Capital Partners). The book is designed as a guide for those who are contemplating an entrepreneurial pursuit, are already engaged in building a business, or are currently working for someone else and want to inject their entrepreneurial ideas and attitude.

As I read through the book about the rewards of taking risks in building a business, one point jumped out at me. The author says that risk must be embraced in order to be successful; yet people are afraid of risk. “Risk means having to face an uncertain outcome.”

In terms of the differences between men and women, what does this mean? If women are more risk averse in business, they will be less successful. In our risk averse society, where everyone must be covered from cradle to grave and have the hand of a “benevolent” government guiding them, what does this mean for the entrepreneurial spirit? Add to this the punishing taxes and regulations on small business and it is a recipe for less economic growth.

Will men become more risk averse as time goes on due to the social conditioning that risk is bad? Or, even if willing to take business risks, will men decide it is not worth the trouble due to the restraints of the government? Or will they become more risk-takers by going to the underground economy and staying below the radar? I suspect that the latter option will become more popular for men while women will flock to safer jobs and opportunities funded by the government.

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All Comments   (5)
All Comments   (5)
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Women are all for that: "socialize the risk, but privatize the gain", Wendy Davis style.
46 weeks ago
46 weeks ago Link To Comment
Isn't the proper usage "risk averse" and not "risk adverse"?
46 weeks ago
46 weeks ago Link To Comment
Attracting women is a huge motivator for young men. In the past, women (or more accurately their parents) were drawn to good providers with resources or potential for resources. This incentivized men to become that. Now, women are free to follow the command of their libidos and ignore the "boring" & "nerdy" providers and entrepreneurs and bed thugs and players. Thus, men are incentivized to become that.

The providers and entrepreneurs of tomorrow will come from immigrant and/or religious communities that put some kind of control on the libido of their daughters.
46 weeks ago
46 weeks ago Link To Comment
Interesting. While I'll admit I have a professional bias on the topic (I work in financial risk management), I think there's an important point acknowledged in the profession to consider. Risk isn't necessarily something to be avoided. It is something to be managed and controlled. Perhaps the most central point is that when one incurs risk, one should be compensated. Put mathematically, the greater the variance in returns, the greater the mean return needs to be. That's an ill omen for the future of risk-taking. In effect, the consequence of policy looks like it's going to be geared to limiting returns. In that case, marginal risk-taking becomes a bad call.
46 weeks ago
46 weeks ago Link To Comment
I suspect we may see a greater willingness by men to take risks. Personally, being married and having chldren tempered my willingness to take financial risks more than anything else. Today we have fewer marriages and fewer children. Plus, men will have the safety net to fall back on.

The underground economy will grow also. Bartering and unreported cash exchanges will increase. This already goes on a lot with farmers, certain small businesses and people receiving unemployment, welfare or Social Security benefits. Expect an increase in this activity.
46 weeks ago
46 weeks ago Link To Comment
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