Psychology of entrepreneurship: risks

Konstantin Levitsky, Consultant at DELCON PARTNERS
magazine "Russian pharmacies" No. 5-2007.

Risk is one of the most constant and faithful companions of business. Of course, times of economic downturns and crises imply much less predictability of events and a greater probability of their unfavorable outcome. But rapid development and even stabilization generate whole complexes of specific problems in the field of entrepreneurial risks.

The creation of risk management systems that would allow them to be managed comprehensively and effectively is an urgent task in any field of entrepreneurship, regardless of the scope and specifics. This should be perceived as a condition for successful competition in the market. Risk assessment is one of the main tasks facing both the management of organizations and individual entrepreneurs.

But how can you really manage events that are not relevant to the present moment, but only probable? After all, risk, by definition, is only an opportunity to suffer damage due to an unfavorable combination of circumstances that may not occur, and are not always available to control.

To begin with, we note that the risk can be measured. Even non-specialists are familiar with such a concept as the degree of risk. It is the product of two factors: the first is the probability of an event harmful to us; the second is the "degree" of its harmfulness. So, the supposed harmfulness of falling from a ten-kilometer height can make you think; but multiplied by the estimated (very small) probability of getting into a plane crash, it will give a degree of risk that we can consider quite acceptable.

The subject of today's conversation will be not so much objective statistical data as the subjective reaction of the person himself to them. So, if we develop the already raised topic of the degree of risk during flights, the same stubborn statistics show that the demand curve for passenger airliners sharply goes down after major plane crashes. Moreover: as we can guess, the degree of decline in this demand depends on the amount of attention paid to the disaster by the media…

Thus, risk assessment sometimes includes not only a statistical, but also a psychological component. And often they come into conflict with each other. Even in the example given, the behavior of consumers of aviation services is rather irrational: after all, from the point of view of probability theory, the catastrophe that has occurred does not increase, but reduces the probability of a similar case in the near future.

Everything becomes even more interesting when it comes not only to the alleged damage, but also about the possibility of receiving (or not receiving) profit. We bring to your attention several situations. In each of them, you can make a choice between a guaranteed development of events and a certain degree of uncertainty. So, which would you prefer:

Situation A.
Get $12 for free or play a lottery where a ticket costs $ 12, in every fourth there is a $60 win, and in the rest there is no win, but for "empty" tickets you will get your $12 back.

Situation B.
Get 50,000 rubles for free or play a lottery where a ticket costs 50,000 rubles, in every fourth – a win of 250,000 rubles, and in the rest there is no win, but for "empty" tickets you will get your 50,000 rubles back.

Now let's change the situation: you have to choose between losses, not acquisition opportunities. Which choice is preferable for you?

Situation B.
To lose $20 for sure or to play a "lottery", where 4 out of 5 tickets are empty, and in each 5th there is a $100 fine.

The situation of G.
To lose 100,000 rubles for sure or to play a "lottery", where 4 out of 5 tickets are empty, and in each 5th - a fine of 500,000 rubles.

Offer this small test to your friends, ask them to justify their choice and observe the differences in reactions depending on their character, property status, etc.

Now let's look at these situations from the point of view of impartial statistics.

To begin with, within each situation, the choice turns out to be statistically balanced. So, the probability of winning on the right side of situation A is 1/4. We will deduct $12 from the won $60 (ticket price). Multiply the remaining $ 48 by the probability of winning 0.25. We will get the same $12 that we could get without risking being left with nothing (but also losing the chance to quadruple our "fortune").

Mathematically, the situation is similar to B – even the probability is the same, 1/4. But ... someone, faced with big numbers, preferred the "golden tit" in his hands to the "diamond crane" in the sky. And someone continues to take risks – the increase in rates only provoked him.

As for situations C and D, here, too, the amount of the fine multiplied by the probability will give us the same $ 20 and 100,000 rubles as guaranteed losses. Despite this, people make different choices, and even insist on them, finding different explanations for them.

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its report "Risk Management of organizations. Conceptual foundations" (M., 2004) provides the following data. According to perspective theory, people are usually unwilling to put what they have at risk. However, the level of acceptable risk increases when people believe that they can minimize the impending losses.

What other subjective factors can influence the choice between guarantees and risk, between reasonable risk and reckless risk? We believe that all of them are divided into two large groups: rational and irrational.

An example of a rational factor in the above "situation D" can serve as a balanced financial policy of the player, based on a responsible attitude to their obligations. If he, not being a large entrepreneur, is still able to amortize the loss of 100,000 rubles, but a fine of half a million threatens complete bankruptcy and a debt pit, then the rationality of choosing the right moderate loss is obvious. Of course, if the same penalty is not in every 5th, but only in every 50th ticket, then he will most likely make the opposite choice, considering the probability of his bad luck negligible.

Here we come to the second group of factors, where we can no longer talk about rational knowledge based on experience, but on irrational confidence, which often generates this experience.

Surely among your acquaintances there are those who have been going to their failure for a long time and persistently (not necessarily in business; for example, in family life), patiently ignoring any opportunities to correct the situation and methodically clinging to "lead lifebuoys". Their more or less constant refrain was "It won't work anyway! (option – "Because of them!)". In the end, they convince themselves, others, and fate itself of this.

But there are also those who, in the words of one of the Moscow psychologists, "like dagger knives pass through circumstances and problems," get away with it and are still cheerful, even turning defeats to their advantage.

Among the author's acquaintances there are people who have been buying lottery tickets for years and have never won. But there is a family that regularly won household appliances. Luck reached its climax when a 12-year-old daughter found a lottery ticket with a... car in the trash. The deadline for receiving the winnings expired literally the next day, it had to be presented in Moscow, and they lived on the Middle Volga. Needless to say, they managed to – despite the height of the summer season and a terrible shortage of tickets.

So, should we bet on finding lucky managers, luck–bringing specialists, "unsinkable" accountants - and save a lot of money on marketing research?

Turns out, no. The problem is that there is a huge difference between simply stating the fact "I'm lucky" or even "I'm usually lucky" and saying "I'm lucky". The passive voice of the first two formulations indicates that the source of my luck is outside of me, beyond my control and beyond my control. Since he is not in my power, then I cannot guarantee my luck, I cannot take full responsibility for luck.

The premise "I am lucky" indicates that the foundation of my luck is in myself, in some of my special qualities; I take credit for my luck. This already smacks of superman philosophy, if not paranoia. What is acceptable as a vivid image in a movie (Fandorin is lucky all the time; that's why he doesn't play unnecessarily – it's boring) is inappropriate in the business world. Otherwise, you really need to keep a staff of fortune tellers and sorcerers instead of the marketing department.

However, the famous psychologist Carl Gustav Jung argued the following: if a person tries to ascribe to himself uncharacteristic qualities, to impersonate someone who he really is not, then a time bomb grows in his subconscious, which can work for failure and exposure at the most crucial moment.

It is not by chance that we have paid so much attention to irrational subjective factors. After all, they are the basis of the first reaction to the occurrence of risk and influence the subsequent rational analysis of the situation. Returning to our tests – by asking friends (how they made their choice), try to determine what percentage of their explanations directly or indirectly relate to the topic of their luck.

In practice, the subconscious calculation of one's own luck can lead to excessive self-confidence in conditions of lack of information. As noted in the already mentioned COSO report, "decision makers in various fields, including company managers, are overly confident in their ability to assess the situation and do not recognize the uncertainty that actually exists. ... This tendency of "excessive confidence" of managers in assessing uncertainty can be minimized with the effective use of empirical data obtained from external and internal sources."

Thus, we are faced with a choice similar to situations like "B" and "D". This is either a deliberate waste of money on searching, obtaining and analyzing these very empirical data, i.e. information about the probability and destructiveness of threatening factors, or, relying on "maybe" (or on your luck), saving on prevention in order to one day discover an "insidious blood clot" in the very heart of your organization. And then, even if the "patient" survives, emergency cardiac surgery, resuscitation and subsequent rehabilitation will cost a pretty penny, incomparable with the costs of prevention.

In the same situations, which are characterized by an approximately equal degree of risk, some happily rub their hands, anticipating victory, while others gloomily repeat about the impending defeat.

The peculiarity of irrational factors is that you should not ignore them, but you should not bet on them, especially not. Otherwise, we risk repeating the fate of Pushkin's Herman – at the peak moment, instead of the decisive ace, an insidious lady suddenly falls out, and there are no guarantees that the psyche will withstand it.

Portal "Eternal youth" www.vechnayamolodost.ru25.03.2008