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The psychology of taking risks

Shaw explains that whether it be to sell a million pounds of shares or crossing the road, most of us have personalities that can be categorised as risk avoiders or risk takers in business.

There are, in addition, gender biases in risk taking although we have to be mindful of stereotypes as we are not just products of chemicals and anatomy. That being said, the prefrontal cortex (PFC) is larger in women and regulates emotional responses. The amygdala is larger in men and is pivotal in emotions. One could therefore argue that women are more likely to control risky behaviour.

“When weighing up risk men are more likely to be concerned with hitting objectives while women tend to be more concerned about the effect the risk will have on people involved. Male risk-taking tends to increase under stress, while female risk-taking tends to decrease under stress. It could be argued that in a stressful business situation men and women working together would make better risk-taking decisions than either gender alone.

Generally during a recession we are more likely to lack confidence and so become more risk averse but now as the economy is growing we need to approach risk with calculated confidence. Shaw echoes this sentiment, stating that calculated risk should not be considered reckless. Risks to an international enterprise may be concerned with answering to their shareholders whilst a small start-up may have risks associated with taking their first office space.”


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