The Risk Factor

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The late Muhammad Ali once said: “He who is not courageous enough to take risks will accomplish nothing in life.” The poet T. S. Eliot declared that: “Only those who risk going too far can possibly find out how far one can go”. Even Albert Einstein, defined by the word ‘genius’, trumpeted the case for risk, saying: “A ship is safe at the shore – but that is not what it is built for”.

Ali, Eliot, and Einstein are just a tiny selection, from the pantheon of philosophers, scientists, giants of industry, artists, and successful entrepreneurs, who proselytize the merit of ‘risk’.

The respect for risk is not a new thing.

The medieval Sephardic Jewish philosopher Maimonides said: “The risk of a wrong decision is preferable to the terror of indecision”. Not forgetting, the immortal bard Shakespeare who clearly understood the importance of grasping the nettle with the classic lines: “There is a tide in the affairs of men which, taken at the flood, leads on to fortune; omitted, all the voyage of their life is bound in shallows and in miseries.”

The irony of this is that risk is generally defined as a negative. According to the Oxford English Dictionary, risk is:

  • a situation involving exposure to danger
  • the possibility that something unpleasant or unwelcome will happen
  • a person or thing regarded as a threat or likely source of danger
  • the possibility of financial loss

So, the question is simple: why do these people advocate the seemingly perilous path of a risk – well taken?

Although risk taking is often framed negatively, it can also be path to opportunity. There’s a popular fallacy that the Chinese word for ‘crisis’ is comprised to two characters: one signifying danger, the other opportunity. It’s a popular meme for business speakers and motivational gurus. It’s not strictly true but the sentiment resonates: a risk taker is prepared to gamble

To unlock opportunity, you need to embrace risk. Success favours the bold: feint heart never won fair maiden. It’s simple: life’s winners are not afraid to look adversity in the face and dance with the devil.

There are checks and balances. Shrewd players are patient, focussed on the end goal, gather intelligence, and minimise risk where possible. They are still happy to gamble but they try to manipulate the odds in their favour.

The parallels with the casino are obvious. Blackjack is a game of chance but canny play will ensure that any player gets the best possible outcome from the game. By following a tried and tested – statistically-proven methodology – you will win more hands against the dealer.

Risk belies its definition. It can be a positive force, if you are prepared to take it.

Who are the risk takers?

Much research has been undertaken to discover the mechanic of the successful entrepreneur. One work, often cited, is the 1985 paper by Sexton and Bowman entitled ‘The Entrepreneur: a capable executive and more’.

The work is detailed and examines the traits of entrepreneurs. It reports that there is a tendency for them to be tolerant of ambiguous situations and very autonomous, self-reliant, and independent. Entrepreneurs are aloof on a one-to-one basis but socially adroit. Critically, they enjoy taking risks, can adapt quickly, and have a low need for support. The ability to cope with any given situation mitigates any negative fallout from the other listed traits.

Another popular subject for academic research is the psychology of gambling. The University of Cambridge Behavioural and Clinical Neuroscience Institute (BCNI) has been probing the grey matter for nearly a decade, evaluating and examining what makes a casino gambler tick.

The research acknowledges that gambling has been a ‘form of entertainment throughout the ages’ but questions why people play when the house is shown to have an edge in the long run. Once again, it all comes to a willingness to take a risk.

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The Whales

Packer

One of the best examples of an entrepreneur who loves the casino is the Australian media tycoon Kerry Packer. Packer passed away more than a decade ago and there are still casino managers mourning his death.

Packer made his fortune in the print and television media business. He inherited a media empire, sold and invested wisely, and turned it into an $11 billion empire. Packer’s visits to Las Vegas casinos would be met with a mix of fear and excitement. His wins and losses had the potential to break or make a casino.

The most popular Kerry Packer story refers to an exchange he had with a loud-mouthed Texan oil tycoon. Packer was playing cards in the Bellagio when the Texan said he wanted to join him at the table. Packer rejected his proposal and the Texan said: “I’m a big player too. I’m worth $100 million.” Kerry replied: “If you really want to gamble, I’ll flip you for it.” The Texan backed out. Suitably chastised, the Texan quietly went back to his game. As they say in the Lone Star State: he was ‘all hat and no cattle’.

 

Khashoggi

International arms dealer Adnan Khashoggi was once the richest man in the world. Lucrative sales of aircraft and arms to the Middle East made the billionaire a welcome attendee at any casino. Khashoggi was a heavy hitter at the London Ritz where he lit up the casino’s roulette and baccarat tables.

In the end, his business dealings were better than his gambling skills. Initially, he was lucky at the roulette but he made the dangerous mistake of chasing a loss. He ended up bouncing cheques and was subsequently sued by the Ritz.

 

Borge

Known as the ‘Denim King’, Mexican textile billionaire Kamel Nacif Borge is a regular visitor to the casino tables of the Las Vegas strip, six to ten times a year. The baccarat fan is renowned for his short temper and is easily agitated when the cards are not going his way.

The fact that he takes up a $5 million bankroll and bets an average of $160,000 per hand might have something to do with that delicate temperament. Borge is a major player and is said to have taken between $18 million and $22 million from Las Vegas casinos. How much he has put in is a different question.

 

Ready to Play?

Although risk is the key driver and the link between the business man and the gambler, it’s worth highlighting the other attributes that lead to success.

Here is a list from business magazine Forbes of the ten key attributes necessary for the successful businessman today:

  1. Persistence, persistence, persistence
  2. Thick skin
  3. An eye for talent
  4. Never be satisfied
  5. Fearlessness
  6. Owning your mistakes
  7. Toughness
  8. Win friends and influence people
  9. Singular vision
  10. Passion

 

Now, let’s look at the same list from a gambling perspective:

  1. Persistence, persistence, persistence

Definitely not one to take to the tables. The golden rule of gambling is knowing when to stop. Don’t persist – walk away!

  1. Thick skin

If you are playing a bankroll, there might be choppy water before you hit a hot streak. Thick skin will help you get through the sticky patches. Don’t let it lead into trouble though…

  1. An eye for talent

Always good to join a blackjack table with players who know exactly what they are doing. You can also hustle for less packs of cards in a blackjack shoe, if you are playing serious money.

  1. Never be satisfied

No… Be satisfied and walk away when you are ahead.

  1. Fearlessness

No… a little cautious fear is a good thing in the casino.

  1. Owning your mistakes

If you are playing in a casino, mistakes will cost you money. They already belong to you.

  1. Toughness

See answer for ‘fearlessness’!

  1. Win friends and influence people

There’s no harm in finding a friendly dealer casino, or table.

  1. Singular vision

See answer for ‘fearlessness’.

  1. Passion

See answer for ‘fearlessness’.

 

So… in the end, a love of risk is the only TRUE link between a successful businessman and a great gambler. A businessman will also endeavour to minimise the risk. In the casino, the risk is pre-determined: it’s the house edge.

 

RECREATION NOT EMPLOYMENT

In the end, a little action online at the tables of your favourite casinos is a means of recreation. Business giants like Packer, Khashoggi, and Borge have such insanely deep pockets that they can afford to go deep.

For the rest of us mere mortals, the advice is simple: bring your business brain to the table. Play sharp, observe the rules, realise the odd , only risk what you can afford to lose, and – most importantly – HAVE FUN!

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