Let me tell you a story that’ll change how you think about risk forever.
In 2007, while every bank was hiring more risk managers and building fancy models to “manage” their exposure, a small hedge fund manager named John Paulson was doing something completely different. He wasn’t managing risk – he was taking it. Massive amounts of it.
While Goldman Sachs had armies of PhDs calculating risk metrics, Paulson bet $15 billion against the housing market. The risk managers called him crazy. The models said he was wrong. But Paulson understood something they didn’t: sometimes the biggest risk is listening to the risk managers.
When the dust settled, Paulson made $4 billion personally in one year. The banks with all their sophisticated risk management? They needed taxpayer bailouts to survive.
That’s the difference between studying risk taking and studying risk management. Paulson took a risk, not managed it. He took a risk with a massive upside and limited downside.
And it’s why Nassim Taleb’s blunt advice – “you should study risk taking, not risk management” – should keep every leader awake at night.
For example, I left a lucrative tech career after 16 stable, successful years. People told me I was crazy—“Why risk it all?” they asked. The downside? Short-term uncertainty, some financial instability, maybe losing my identity. But I could always come back to a job in a few months or years (limited downside)
But the upside was infinite—I was betting on my purpose, my passion, my freedom. Today, I can’t even measure how much this decision has impacted me and the lives of countless others who now believe in their own power because they watched me embrace mine.
What if the biggest risk you are taking is not taking enough risks?
The Problem with Playing It Safe
Here’s what nobody wants to admit: most people who are terrified of making mistakes. They’ve built entire careers on not screwing up, and now they’re in charge of organizations that need to take big swings to survive. This is not wrong. This is not a judgement. This is a honest look at how most of us live our lives – and I do not exclude myself from this.
Take Kodak. They had brilliant risk managers who could calculate the probability of various market scenarios down to the third decimal place. They had committees and processes and approval chains designed to minimize risk. They also invented the digital camera in 1975.
But their risk managers said digital would cannibalize their profitable film business. Too risky. Better to manage that risk by… doing nothing.
Meanwhile, a couple of Stanford students named Larry Page and Sergey Brin were building something called Google. No risk management department. No sophisticated models. Just two guys willing to bet everything on a crazy idea about organizing the world’s information.
Kodak went bankrupt. Google became worth a trillion dollars.
The lesson? When you’re obsessed with managing risk, you often miss the biggest risk of all: becoming irrelevant.
For example, I openly shared provocative and confronting e-books — like the “6 Silent Killers for Organisations” and “5 Invisible Lies That Hold Us Back”—that challenged CEOs to see uncomfortable truths. There was a clear risk of backlash, misunderstandings, or alienating people. Few people even blocked or ghosted me. Limited downside.
But the upside? It became a powerful filter, attracting only those leaders ready to face reality. Now, these frameworks work for me, even when I’m asleep, drawing in exactly the type of bold, committed clients I want to serve.
Example
Another example of a risk with limited downside and unlimited upside: a friend of mine who had just started an NGO in 2011 reached out to 30 celebrities and asked them for brand endorsement.
Everyone advised my friend to do this when they have money or a few years worth of credibility. He did it anyways. 29 people didn’t even reply (limited downside).
One person – a famous cricketer – said YES. (unlimited upside)
As a result, they did in 7 months what the state govt was not able to do in the previous 7 years.
The Big Data Trap That’s Making You Dumber
Everyone thinks more data automatically means better decisions. This is like saying more ingredients automatically make better food. Sometimes they do. Sometimes you end up with a mess.
Netflix figured this out early. They could have built incredibly sophisticated models to predict what shows would succeed. Instead, they developed a different approach: make lots of different shows, see what works, double down on winners, kill the losers fast.
Their risk wasn’t in any single show failing – that was expected. Their risk was in not trying enough different things.
Compare that to traditional TV networks, which spend months analyzing market research, focus groups, and demographic data before green-lighting a show. All that analysis, all that risk management, and most shows still fail.
The difference? Netflix treats content creation like a portfolio of intelligent risks. Traditional networks treat it like a series of bets they’re trying not to lose.
For example, I coached a founder recently whose company had just one month of runway left—and I didn’t ask for payment. I risked never seeing a dime for my efforts. People advised me against it: “You’re crazy. You’re giving too much away.” (limited downside)
But I knew the upside was priceless—trust, reputation, and genuine human connection. That founder later told others about my commitment, cementing my reputation as someone who stands by leaders even in their darkest moments. (huge upside)
The Two Types of Risk (And Why Most People Get This Backwards)
Here’s where most leaders screw up completely. They worry about the wrong risks while ignoring the ones that can actually destroy them.
Think about it like this: there are two types of risk – ruin risk and volatility risk.
Ruin risk can destroy you. Betting your entire company on one product. Taking on so much debt that one bad quarter kills you. These are the risks you should be paranoid about.
There are legitimate situations where a defensive risk-management strategy is appropriate:
– When you’re protecting something valuable that took years to build
– When the consequences of failure are genuinely bad
Volatility risk just makes your life bumpy but doesn’t destroy you. Trying a new marketing channel that might fail. Launching a product that might flop. Hiring someone who might not work out.
Most companies do this backwards. They’re super careful about small decisions (volatility risk) while making huge bets that could sink the company (ruin risk).
Take WeWork. They were incredibly loose with small operational decisions – that’s fine, that’s just volatility. But they also made massive real estate commitments based on projected growth rates that were basically fantasy. That’s ruin risk disguised as a business model.
Smart risk takers like Amazon do the opposite. Jeff Bezos was famous for making lots of small bets (most failed – that’s expected volatility). But he was obsessively careful about anything that could threaten Amazon’s core business (ruin risk).
Why Crises Create Opportunity (If You Know How to Look)
Every crisis sorts people into two groups: those who panic and those who see opportunity.
During the 2008 financial crisis, most companies went into survival mode. Cost cutting, hiring freezes, playing defense. Understandable, but not very smart.
Meanwhile, companies like Apple and Amazon went on the attack. Apple launched the iPhone in 2007, right before the crisis hit. Instead of pulling back, they doubled down on marketing and innovation. Amazon used the crisis to acquire talent and technology cheaply while competitors were cutting costs.
The result? Both companies emerged from the crisis stronger and more dominant than before.
Here’s the thing about crises: they don’t just destroy value, they redistribute it. Resources become available. Talented people become available. Market share becomes available. But only if you’re positioned to take advantage instead of just trying to survive.
This is why risk takers thrive during crises while risk managers just try to minimize damage.
For example, one executive leader I coached had the habit of jumping into every crisis, firefighting daily. They risked stepping back—letting others solve their own issues, even if mistakes happened. The downside? Potential short-term chaos, visible failures, anxiety from surrendering control. But the upside? Leaders emerged beneath them, independent problem-solving thrived, and the team’s performance grew exponentially. They became a coach, not a crutch.
The Facebook Problem: When Winner-Take-All Goes Wrong
Here’s something that should scare every leader: we’re living in a winner-take-all world, and most people don’t understand what that means.
Twenty years ago, if you were a good soccer player, you made decent money playing for your local team. Today, the top 1% of soccer players make millions while everyone else struggles to make a living. Same skill, different world.
This happened because globalization and technology created winner-take-all markets. Facebook doesn’t just compete with other social networks – it dominates so completely that competitors barely exist.
Here’s the scary part: the same forces that let Facebook rise to the top can make them disappear just as quickly. Remember MySpace? They were Facebook before Facebook. Completely dominant until they weren’t.
This creates a paradox for leaders: you need to take bigger risks to reach the top, but being at the top is more fragile than ever. The road up is steep and risky. The road down is just as steep and happens just as fast.
Smart leaders understand this. They know that in a winner-take-all world, playing it safe guarantees you’ll lose. But they also know that winning doesn’t guarantee you’ll stay on top.
How to Build a Risk-Taking Organization
If you want to transform your company from a risk-managing museum into a risk-taking machine, here’s what actually works:
Start with hiring. When you interview candidates, don’t just ask about their successes. Ask about their failures. Specifically, ask about times they took intelligent risks that didn’t work out. If someone has never failed at anything significant, they’ve never risked anything significant.
Change your promotion criteria. Stop promoting people primarily because they “never made mistakes.” Start promoting people who made intelligent mistakes, learned from them, and used that learning to achieve bigger wins.
Create safe-to-fail experiments. Structure decisions so the cost of being wrong is small but the benefit of being right is large. This lets people take risks without betting the company.
Celebrate intelligent failures publicly. When someone takes a smart risk that doesn’t work out, don’t just avoid punishing them – actually celebrate the attempt. This sends a clear message about what behavior you want to see more of.
Put risk takers in charge of important decisions. Don’t let risk managers veto every bold initiative. Put people who understand risk taking in positions where they can actually take risks.
Example
A client of mine who had clients ranging from 0.5-2M$ went after new clients worth 10M$ or more. Most people said they had no business going after such large clients until they have more leverage, clarity, experience, brand value, etc etc.
Going after these huge 10M+ clients was a risk.
The downside – getting rejected, being called bold or audacious, but nothing else. Limited downside.
The upside – even one new client at a 10M+ could change the trajectory of their company. Unlimited upside.
What really happened?
My client got a new client for 5.5M$ after 3 months and 4 rejections. That one YES improved their annual revenue by 50%.
Read that again. That’s one conversation. One YES. 50% annual revenue increase.
That is the power of taking risks with unlimited upside and limited downsides.
The real risk is in not taking these risks.
The Question Every Leader Must Answer
Here’s what it comes down to: Are you building an organization that can win, or just one that won’t lose?
Because in today’s world, those are two completely different things.
Companies that focus on not losing become incredibly good at… not losing. They develop sophisticated systems for avoiding mistakes, minimizing downside, managing risk. They become efficient, predictable, safe.
Nothing wrong with that. But they also become irrelevant when others grab opportunities that they could have done too.
This is often the difference between one company growing at 500% and another growing at 50%. Both good growth. Very different definitions of risk though.
Companies that focus on winning understand that winning requires risking losing. They develop different capabilities: pattern recognition, rapid experimentation, intelligent failure recovery, asymmetric betting.
They become volatile, unpredictable, sometimes messy. They also become the companies that shape the future.
Your Move
The world doesn’t need more risk managers. It has plenty of those already, and look where it’s gotten us – organizations so afraid of making mistakes that they’ve forgotten how to make progress.
What the world needs is more intelligent risk takers. Leaders who understand the difference between ruin risk and volatility risk. People who can see opportunity in uncertainty instead of just threat.
The choice is simple: you can keep building systems to manage risk while your competitors take the risks that create the future. Or you can start attracting and developing the kind of people who understand that in a world of accelerating change, the biggest risk is not taking enough intelligent risks.
Your competitors are making their choice right now. What’s yours going to be?