High-Stakes Strategy Exploring how entrepreneurs can turn risk into opportunity as we approach 2025

Rob Moore, Dr. David Hillson and Mariam Crichton examine how entrepreneurs can leverage risk as a driver of innovation, stressing the need for calculated decision-making and strong governance in a changing business environment.

As we approach 2025, the spectre of risk looms large for entrepreneurs, influencing decisions and shaping strategies across industries. Yet, rather than viewing risk solely as a threat, it can be reframed as a catalyst for innovation and growth.

Entrepreneur UK talks with prominent figures such as Rob Moore, founder of Progressive Property and host of the Disruptive Entrepreneur podcast; Dr. David Hillson, recognised as the Risk Doctor; and Mariam Crichton, a non-executive director at the Institute of Risk Management (IRM). Their perspectives illuminate how adept risk management not only fortifies businesses against uncertainty but also positions them to thrive amid it. In an age where adaptability is paramount, understanding risk may well be the distinguishing factor in the entrepreneurial journey.

The hidden costs of inaction
Rob Moore, a self-made multimillionaire entrepreneur and author, offers insights into property investing and financial education. His journey serves as a compelling reflection on risk, illustrating how embracing it can unlock pathways to wealth and personal growth.

"The biggest risk I took that failed for eight years was traditional education. Instead of starting my own business at age 18, I went to university and did a degree in architecture which I've done nothing with, and it got me well on the way to £50,000 of consumer debt," he shares.

Moore emphasises that the risks he didn't take—opportunities missed due to fear or indecision—had a more profound impact than any failure.

Related: Lessons in Risk and Reward

"I perceived them as risky, but I now know nowhere near as risky as not starting your own business and not chasing your dreams," he says.

His experience serves as a reminder that the fear of risk can sometimes lead to inaction, with dire consequences. "The biggest risks are the risks I haven't taken. I perceived them as risky, but I now know they were nowhere near as risky as not starting your own business and not chasing your dreams." This highlights a vital lesson: inaction can often be the most significant risk of all. Entrepreneurs must cultivate a mindset that encourages taking calculated risks to avoid the pitfalls of regret.

Calculated risks vs. reckless gambles
Moore further distinguishes between calculated risks and reckless gambles. "The opposite of a reckless gamble should be a calculated risk. A reckless gamble would be something you do emotionally and whimsically, spontaneously as opposed to with research analysis and strategy. Reckless would be to do something just because someone told you to or just because someone presented you with an opportunity."

He warns against the allure of quick gains that come without understanding the underlying factors, noting that desperation and copying can lead to poor decision-making. Someone may have invested in Bitcoin for the price of a pizza, but things have changed. Instead, he advocates for a structured approach to risk management.

"A calculated risk becomes one when you minimise or de-risk your loss and protect the downside." For instance, in real estate investments, he stresses the importance of having contingency plans. "If I buy real estate for development, I make sure it can still work if I have to put it back to its original use."

For example, when Richard Branson started his airline, he de-risked by having a give-back option on the aircraft. Instead of risking potentially hundreds of millions on buying the aircraft that he couldn't use, he had a give-back clause such that if the business didn't work, he could at least liquidate and get most of his investment back.

"If you can de-risk an opportunity whereby the only thing you lose is time and not money, and in the pursuit of the investment or opportunity you were able to learn, even if you didn't earn, this is a good de-risk", he adds.

This pragmatic approach highlights the importance of evaluating risks against potential rewards and implementing safeguards that allow for recovery even when things don't go as planned. He goes on to say that no professional investor would put all their money in one class or one sure bet, and maybe it's wise for entrepreneurs to not 'go all in' or 'go big or go home'.

"High risk, high reward and highly reckless behaviour are very close together," he adds.

Learning from setbacks
The unexpected nature of risk is a common theme in entrepreneurship. "The single most unexpected lesson about risk is that all things that challenge you greatly are unexpected, because if they were expected they wouldn't have challenged you greatly," Moore explains.

The COVID-19 pandemic serves as a prime example. "You can plan for everything in 2020 but not the lockdown; you could never predict that would come." This unpredictability underscores the need for agility in business operations. Entrepreneurs must be prepared to pivot and adapt to unforeseen challenges. Maintaining liquidity, being agile, and having the capacity to change direction are essential strategies to mitigate risk in volatile environments.

Nothing is risk free, and Moore reflects that "the only thing you can truly plan and prepare for if you want to minimise risk, is the thing that you can't plan and prepare for." He concludes that the biggest risk is taking no risk, quoting the Canadian ice hockey player Wayne Gretzky that said he doesn't skate to where the puck is, he skates to where the puck is going. In the game of risk, the winners are those who anticipate where the puck—and the market—are heading, adapting to emerging trends and evolving buying behaviours.

Embracing innovation through risk
Dr. David Hillson, a renowned expert in risk management, often referred to as the 'Risk Doctor' emphasises the positive aspects of risk, defining it as "uncertainty that matters."

He insists that not all risks are negative; some can present significant opportunities. "Entrepreneurs understand that they need to take risks in order to innovate, be creative, and ensure they are competitive—especially in the startup phase," he notes. Hillson advocates for an integrated approach to risk management, encouraging businesses to minimise threats while maximising opportunities.

"The goal is to minimise threats, maximise opportunities, and optimise performance. Entrepreneurs understand that they need to take risks in order to innovate, be creative, and ensure they are competitive – especially in the startup phase. The best way to do this is to include upside risk or opportunity in our risk thinking and practice, proactively capturing additional value that would not otherwise be available." This dual approach is vital for startups, which often need to balance rapid growth with effective risk management practices.]

He advises startups to conduct a structured vulnerability assessment to understand areas of potential weakness in the business, then ensure that key assets, resources and IP are protected. He advises to simultaneously conduct a SWOT Analysis to compare competitor strengths and weaknesses with your own, then design product development and marketing strategies to maximise relative performance.

"During rapid growth phases, use an agile approach to identifying and managing risk, ensuring that the pace of the risk process matches the pace of growth. Higher risk clockspeed is the goal."

Hillson advocates integrating risk management into core business operations. He believes organisations should foster a culture where all employees, from executives to front-line staff, make risk considerations second nature, enhancing efficiency and agility in navigating challenges.

"Effective management of risk should be second-nature, built into all aspects of the business from top to bottom, informing all decisions and focusing effort in order to be efficient, effective and efficacious. It's also vital to understand your risk appetite and have sufficient risk maturity to self-moderate this where necessary, deliberately adopting risk approaches that might be outside your comfort zone in order to take the right risks safely."

Sustainable growth and good governance
Mariam Crichton echoes this sentiment, emphasising that rapid growth is not always a positive indicator.

"It needs to be good sustainable growth that will last," she advises. Today's businesses must consider a variety of factors beyond just financial metrics. The environmental impact, societal implications, and geopolitical risks are increasingly important in evaluating the overall health of a business model.

"Good governance is critical," Crichton continues. "Access to up-to-date information is essential for making the best strategic decisions." In this context, businesses that embrace risk while adhering to sound governance principles are better positioned to navigate complex challenges.

She goes on to say that there is no way to ignore risk - either you embrace it and manage it OR end up playing a game of failure roulette.

"In today's hyper-technology-oriented world with rapidly changing geopolitical dynamics business leaders must stay vigilant and be ready to pivot as new emerging trends (AI, climate change, etc.…) take hold," she warns.

Emerging trends in risk management
As the business landscape evolves, so do the challenges associated with risk. Crichton points out that growing environmental, social, and geopolitical risks pose significant threats. Additionally, emerging technologies, particularly AI, present both opportunities and challenges. "Growing cybersecurity threats have the potential to significantly impact operations and reputation," she warns.

Thus, it's crucial for businesses to remain vigilant and prepared for changes that can arise from technological advancements and societal shifts. "The need for effective operational/enterprise risk management is more acute than ever. Events such as the global financial crisis or the COVID-19 pandemic highlight the far-reaching impacts of operational risk and the consequences of management failure. In the light of these and numerous event organisations must ensure that their policies, procedures, and processes for the management of operational risk meet the needs of their stakeholders," Crichton concludes.

Risky business
Understanding and embracing risk is essential for any entrepreneur aiming for success. As Rob Moore asserts, "If you don't risk anything, you risk everything." By recognising the value of calculated risks, learning from setbacks, and maintaining a proactive approach to innovation, businesses can thrive amid uncertainty.

Adopting a culture of risk that promotes agile decision-making and effective governance will not only lead to improved business models but also pave the way for sustainable growth. In this high-stakes game, the winners are those who dare to take risks while managing them wisely.

Related: Cultivating a Growth Mindset