When running a business, one has to assume a certain level of risk, the possibility of loss or injury, and tolerate a certain level of it as well. As a business person, you are risking your money and have to make decisions based on how much of it you are willing to risk. Generally, successful business people have a higher tolerance for risk than people who opt not to risk.
One way to estimate your tolerance for risk is the coin toss through experiment. Assume someone offers you, along with others, the change to toss a coin. If it comes up heads you get $100. If it comes up tails, you receive nothing. How much would you pay for the opportunity to toss the coin, knowing that the high bidder gets to flip the coin? Given that the expected value of the coin toss is $50 (the average of $100 and $0, the closer to $50 you are willing to pay, the higher your tolerance for risk. When I ran this by my students, the avarge amount they were willing to pay was $20, with some going as low as a buck and some as high as $45
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