RISK AVERSION

Accelerate your business with these expert tips on "Risk Aversion". Analyse and discover this TIP!

The aversion (+) Where do you stand in investing in your company, being a risk-taker, being a risk-taker, being a risk-taker, being a risk-taker, being a risk-taker, being a risk-taker, being a risk-taker, being a risk-taker, being a risk-taker. kamikaze (dives into the pool without seeing if there is water) or insurance (never makes progress because it always encounters a risk)? Risk-taking should be different according to the personal situation of each entrepreneur.

My decisions have to be different according to my personal financial situation:

• Prudence: I have a family, a mortgage and no savings, little health: PRUDENT
• Brave: I have plenty of savings, no dependents, no dependents, good health, plenty of free time... I don't lose anything! RISKY

Risk aversion is a person's preference to avoid uncertainty in their investments. Because of this attitude towards risk, such individuals direct their decisions, investments, businesses or models towards safer but less profitable investments.
Highly risk-averse entrepreneurs reject risk and find it difficult to make decisions, especially in the world of entrepreneurship, where risks always have to be taken.

When classifying an individual as risk-averse in the world of investment decisions, it is necessary to assess his or her preferences as a crucial aspect to bear in mind. It is necessary for each of us to be aware of our natural tendency towards risk in order to correct.

LEVELS OF RISK AVERSION, TWO EXTREMES:

1. Entrepreneurs with rational behaviour that leads them to desire the highest possible profit, assuming risk. They are more risk-takers, choosing products with a higher level of uncertainty even though they know that they are more unstable and that losses are within the realm of possibility.
2. Entrepreneurs who are risk averse and avoid taking on risk as much as possible. People with a high aversion to risk identify with a very conservative profile in terms of investment and choose financial alternatives that are not very risky but stable and with a lower but safer level of profitability.

The basic idea that can be drawn and that summarises the concept of risk aversion is that, if presented with two options or alternatives when it comes to investing, an individual categorised as "risk-averse" will most often choose the one with the lower risk. The latter does not necessarily mean that risky alternatives are always discarded or foregone.

The idea of risk aversion implies at the same time that in the field of investments, riskier investments must be accompanied by a higher degree of profitability in order to be truly eligible options, which is why there is a relationship between risk and return. profitability and risk (+). Because of this coexistence between risk and expected return, risk-averse investors are often divided into several groups depending on their degree of risk aversion.

The degree of investor aversion is often directly related to the profile of the entrepreneur, such as age, experience. Know yourself well so that you can interpret your feelings in every risky situation and know how to make the right decisions!