Your company is too risk-averse
The authors of this article don’t question whether your company is risk-averse – they know it is. In this article, they examine the widespread phenomenon of risk aversion and avoidance and explain how corporate incentives and decision-making practices contribute to it. While CEOs say they support risk-taking and seek to “make failure OK,” the reality is that managers continue to favor small improvements and “safe” investments. In this article, Dan Lovallo, Tim Koller, Robert Uhlaner and Daniel Kahneman present a few practical ways organizations can begin to change the practices and incentives around investment decisions so that managers become less risk- averse in the long run.