Last week I attended two very exciting events celebrating entrepreneurship. The first event was Start-Up Canada’s Kick Off held in Halifax and the other event was hosted by YES (Your Entrepreneurial Self) at the NSCC (Nova Scotia Community College.) They talked about the entrepreneurial culture and what it takes to be an entrepreneur. Both events brought up the same topic, that we live in a very risk averse culture. While the explanations on what created this culture may vary, one thing that we do want to know is whether it is better for an entrepreneur to be a risk taker or risk averse.

A Risk averse person is someone who is reluctant to accept a bargain with an uncertain payoff as they would prefer to choose an option with a more certain result, even if it has a lower payoff. A prime example of this is an investor putting his money into the bank verses investing it in the stock market. The interest in the bank is guaranteed, but it tends to be low. The stock market has a much higher expected rate of return but it fluctuates a lot more so there is a chance of losing value. Even outside the world of finance, people are forced to make daily decisions. Some people prefer to minimize the risk while others, the risk takers go after the high returns no matter the risk.

It is a common believe that entrepreneurs are dare-devils who actually go after risk and enjoy it. However, others believe that the majority of entrepreneurs are actually really cautious, risk adverse people who think something over dozens of times before making a decision. To be a successful entrepreneur you must be a rational thinker and what would a rational thinker do when they are faced with risk? They would try to minimize it. First they would better understand the risk and manage it accordingly then they would analyze their options as they try to predict the uncertain.

One of the panelist at the YES event brought up that at his son’s recent soccer game they lost 12-0 yet each member of the team received a participation medal. Bill Gates once mentioned something similar, “Your school may have done away with winners and losers, but life has not. In some schools they have abolished failing grades and they’ll give you as many times as you want to get the right answer. This doesn’t bear the slightest resemblance to anything in real life.” Where is the risk if you can’t lose or if it is impossible to fail? How will these factors affect the next generation entrepreneurs? Will they be more or less risk averse? While some argue that awarding a child a participation award builds confidence others believe that it stifles the child’s motivation to try harder the next time around.

At the Start Up Canada event, another topic of discussion was “when should we introduce entrepreneurship as an option for a successful future?” High school? Middle School? Some schools even begin at the preschool level. If this is the case, how do teachers and parents help to build entrepreneurial characteristic in their children? Should they reward and encourage risk or stifle it? Please leave your comments and feedback below.

Sources:

Create Debate. (2012). Retrieved March 28, 2012, from http://www.createdebate.com/debate/show/Should_all_children_recieve_a_trophy_or_medal_in_sporting_events_despite_losing

Wikipedia. (2012, March 12). Retrieved March 26, 2012, from http://en.wikipedia.org/wiki/Risk_aversion

Bikhchandani, S. (2009, May 17). Wisdom in hindsight. Retrieved March 28, 2012, from Entrepreneurs are risk averse : http://bikhchandani.blogspot.ca/2009/05/entrepreneurs-are-risk-averse.html