RSA survey finds risk taking reduced by recession
UK businesses are over-cautious and at risk of missing out on opportunities due to a fear of taking risks, according to research from RSA.
The study – Risky Business: how British business leaders are reacting to the recession – highlights how UK business leaders are unable to look beyond the short-term and are unwilling to take risks themselves despite recognising that taking some risks is a necessary part of running a profitable business.
It was conducted the Future Foundation and is the first in a promised series.
The report reveals that 63% of business leaders believe that there is an opportunity to grow their organisation during the recession but only 45% actually expect to see growth.
“For many businesses today, survival equals success. But in focusing on the immediate they are at risk of missing wider opportunities. Missing these opportunities threatens to delay their own success and the wider recovery of the UK economy”, said Neil Lightbown, UK underwriting and strategic claims director, RSA. “UK plc can see the green shoots of recovery but is reticent in helping them grow.”
Other figures
- 58% of the UK population prefers to be cautious rather than to take risk
- 26% of business people enjoy taking risk compared with 17% of the population
- 17% of business people also believe companies are now too cautious in their approach to risk
- 70% of respondents believe they react to perceived risk rather than actual risk
Pendulum swung too far
“These reactions are understandable given the widespread perception that extensive risk-taking helped bring on the credit crunch and the recession”, adds Lightbown. “But the pendulum has swung too far. Risk is a crucial, fundamental part of business decision-making. We need to better understand acceptable risk or we will be so cautious in our business dealings we will ignore the potential green shoots of economic recovery. Businesses can’t take their eye off the future – they need to recognise and grasp the longer-term opportunities.”
The study shows that the concept of risk-taking has become devalued. Less than half of business leaders admire risk takers and a similar proportion believes that entrepreneurship should be rewarded.
