Risk-Benefit Ratio

Risk-Benefit Ratio is the ratio of the risk of an action to its potential benefits. You will hear this term a lot in all the decisions in the pandemic, about the drugs which are being used and interventions being done. However, this analysis is the basis of most high value decisions you make if you find yourself in a leadership or decision making position.

This entire art of taking a decision which can bring value while minimizing the risk is a critical skill. Ability to analyze and weigh the situation is very important. Often I have seen leaders and decision makers learn this intuitive art with experience and results. Balancing the risk of inaction versus a rash blunder and delivering value at critical times is important.

This skill is aided by data available and statistical analysis. Good leaders look at both the macro and micro picture while taking this call. You have to see the short term and long term impact of the decision but time window to take the decision is often limited. Plus if you are in resource limited settings, you risk taking ability also needs to be balanced with your ability to take a hit if things go bad.

Start learning this skill from young age , learn to draw a table on notebook saying risk and Benefit of your decision and then take your call.

Also learn to be accountable for your decision. Any act done by you is yours and you alone are responsible for it. You will make some errors but you will learn and then you learn the art.