Risk is what put an individual in a position to make a decision that will dictate whether they are risk neutral, risk averse or risk takers. A risk is an uncertainty that has a probability of loss attached to a given outcome. There are a number of reasons that make an individual to be risk averse. Firstly, an individual will take risks if the returns of his move will be high. The returns are a form of motivation to the employees. If the CEO promises them a generous remuneration package, the employees will be motivated to take risks in order to prove they deserve to be rewarded. Performance targets play a very significant role in motivating employees. Enforcing difficult to achieve targets will motivate them to be risk takers in order to achieve the set targets. Easily achieved targets will encourage employees to avoid risk taking behaviours. Most people are also pessimistic about undertaking actions that they are unsure of the outcomes. They are unable to discern opportunities from threats. Organisations must ensure that the employees maintain consistency in risk taking behaviour.
The CEO together with the management should develop strategies tackle risks. The procedures include identification of risks, quantify them and ascertain whether the returns are favourable. These techniques will nurture a behaviour that will ensure the employees avoiding any losses and earning the business returns. Single entities face risk problems, which grow bigger, as the size of the firm increases. The management should develop a culture of managing risks to provide guidelines for employees to follow. The culture will help in influencing the personality traits for the employees. The CEO should support these strategies in order to take advantage of risky opportunities that earn the company high returns.
Works Cited
Buschena, David E. and David Zilberman. "What Do We Know About Decision Making Under Risk and Where Do We Go from Here?" Journal of Agricultural and Resource Economics (2004): 425-445. Document.
Paulsen, David Jay. Development of Decision-Making Under Risk. 2012. http://dukespace.lib.duke.edu October 2013.
