Risk, Intelligence and Business
An interestin disucssion going on at Hasseb’s blog. Here is my take on it…
Intelligence is not as much related with taking risks as we think it does. “Higher the risk, higher the return” is one of the fundamentals of finance. However, that fundamental says nothing about intelligence. Point being that, one might be stupid and therefore he might take a risk just because of the fact that he has no idea what he is getting into. This person has a chance of failure but stupidity does not always mean failure so he can be successful too (remember Forrest Gump).
Coming to the intelligent person, now when this person would take a risk, he would assess the risk. He would know how much risk is involved, what are the losses he might have to bear and also, what would be the profits if his risk pays off.
Now with all of this knowledge, why would he not take the risk? That is a behavioral question; people are risk averse or risk takers. Even a stupid (or less intelligent) risk averse person would not try out something new, or enter into a risky venture.
What we call jugari over here is actually innovation. I prefer the latter word over the former because jugar has a negative connotation attached to it, in fact munir’s reply also takes jugar as a wrong practice. The word sounds like you are cheating. What an innovator does it that he finds a new way of solving an old problem, thereby finding new avenues and turning them into profit.
Elaborating on jugari, one of the reasons for it to have a negative meaning associated with it might be because in general we (Pakistanis) try to find shortcuts. In doing so, the quality or the substance is lost. So jugar seems to have two meanings now; one, innovation, two, shortcuts. Shortcuts of course don’t deliver. So a business man using shortcuts to get his product across might not be so successful in the long run bcause he is not just bypassing important aspects, he is completely ignoring them. However, an innovator is not doing that and therefore, has higher chance of sucess.
Like Hasseb asked at the end of his post; what is your opinion?
