“What Is Our Risk Tolerance?”
You cannot advance a growth strategy that pushes too far beyond the level of risk that is acceptable to your company. This is first and foremost a question of the shareholders’ tolerance, for they are the people who ultimately bear the consequences if things go wrong. If you are the sole owner, the level of risk tolerance is fairly easy to establish. If there are multiple owners, as is often the case, then answering the question is a little harder.
As a consultant, I ask people about their risk tolerance directly, and this yields a certain amount of useful information. Perhaps more valuable, though, is looking at what they actually do. We often misjudge our own relation to risk and imagine our tolerance is lower ...
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