We as people take calculated risks every day without realizing it.

We choose to drive even though we know we could get into an accident. We try a new item off a menu knowing there’s a chance we might not like it. We cross our fingers, knock on wood, or make wishes even if we know there’s little chance those rituals work.

But what makes these daily decisions different from the strategic decisions entrepreneurs make is that their choices often go up against bigger risks. If you don’t like a new menu item, you—at worst—might just be out some money.

But entrepreneurs could be out of a job—or even lose their businesses.

In this blog, we’ll talk about how to understand risk versus opportunity, what makes for strategic leadership, and how to mitigate risk while maximizing opportunity. 

How Are Risk and Opportunity Connected?

Many tend to conflate the word “risk” with the word “threat,” when in reality, the two don’t tell the same story. In business, a risk that turns out a negative outcome is a threat. But when something great happens on the other side, that’s how we get opportunities. 

There’s a comfortable middle somewhere in between—but there’s little growth to be earned there, which is why risk-tolerant leaders are more confident pursuing bigger opportunities despite the potential risks involved.

Why? Because the outcomes are so much greater: More innovation, untapped markets, brand-new business strategies, and greater revenue could be waiting on the other side. That said, there’s a balancing act that strategic leaders must make to keep their businesses from suffering major consequences—such as brand damage, financial losses, or operational disruptions.

But achieving your full brand potential means knowing when to try something new—and what has the greatest potential to turn into an opportunity.

Related: Unlocking Success: The Journey to Achieving Full Brand Potential

What Do Strategic Leaders Do?

Strategic leaders aren’t infallible when it comes to taking chances. 

Many know that Thomas Edison failed a thousand experiments before he perfected the lightbulb. Or that Michael Jordan was cut from his school’s basketball team. Or that Steve Jobs was fired from Apple in 1985 due to a major disagreement with the CEO and board. 

But strategic leaders know that balancing risk and opportunity (which we’ll talk about next) means knowing failure is a possibility—and one that’s worth it. That’s just one of several key characteristics of strategic leaders that you can adopt yourself, so you and your business can be better set up for greater opportunities.

Strategic leaders also know how to reduce potential risk by diversifying their projects, investments, markets, and revenue streams, so they have more room for experimentation. That gives them the breathing room to take more calculated risks while staying innovative and cautiously experimental. 

Throughout the process, strategic leaders will also make sure to work through a risk management framework that gets them—and their organizations—prepared for any potential downswings. That means roping in stakeholders, insurance providers, and even third-party vendors as needed.

And perhaps most importantly, strategic leaders are always learning. That means staying up-to-date on industry trends, emerging technologies, potential risks, and other factors that might influence their business decisions immediately and later on. And that mindset carries over to their team, creating a culture that knows there’s always more to learn and room to grow.

Related: Think Like an Entrepreneur! Break Through The Growth Stall

How to Balance Risk and Opportunity 

Depending on your end goal, the type(s) of risks you might be facing in your organization will vary. But in general, you can think of risk as anything that might keep you from reaching your end goal or cause damage to your brand in the long run. 

There are two ways you can classify business risks: internal or external. Internal risks can put your building, finances, employees, or technology in harm’s way. Alternatively, external risks could impact the economy; state, local, or national law; the environment; or even your competition. 

Because of the variety of risks you could be up against, it’s important to conduct a risk assessment before every major decision. It’s a long, detailed process, but it’s a way to cut down on any potential negative outcomes, so you can enjoy more opportunities and fewer threats.

We’ve already talked about types of risk, and that’s actually the first step of your risk assessment: Identifying the risks you might come up against. From there, you’ll want to quantify those risks. How likely are they? How much could they cost now and later? How many people will be affected? Statistical models, historical data, and simulations will help you gather that intel.

Next, you’ll want to group your risks in order of importance and likelihood. You can use a risk matrix to help you with this step, so you can make sure you’re not focusing all your energy on low-probability, low-severity risks.

Then, it’s up to you to mitigate those risks. Figure out how each risk can be addressed, determine what kind of stakeholders need to be involved to make it happen, and prepare yourself with the right technologies, insurance, or strategies to diminish the impact of these risks.

But here’s the truth: Even the best risk assessment won’t keep you out of harm’s way every single time. There’s an art—and power—to accepting some risk as an inevitability. Some of the best minds have learned to accept risk (and even outright failure) as part of their overall growth, and you can, too.

Related: Embracing Failure: Learning from Setbacks in the Innovation Journey

Don’t Take Risks On Your Own

It’s risky business trying to make strategic decisions entirely on your own. 

If you’ve reached a stalemate with an important business decision, need help identifying and pursuing opportunities in your market, or just want help becoming more innovative as a business, it’s time to rope in a seasoned strategic professional.

A well-versed fractional CMO can help you break down barriers to opportunity while minimizing risk, so you can reap the benefits with the assurance that you’re not jeopardizing your business. And unlike a full-time CMO, you’ll only have to pay partial costs while reaping all the benefits.

Click here to get in contact with one of our fractional executives. It’s a free, no-obligation chat, so come prepared with goals that you’d like to confront head-on.