Ram Charan has had personal success as a director of Austin Industries and chairman of its compensation committee, as well as a director of the Six Sigma Academy. He was elected a Fellow of the National Academy of Human Resources in 2000 and named a Distinguished Fellow in 2005.

According to Charan, there’s no shortage of companies that avoid risk and instead rely on a fully proven business model; a tried-and-true product mix, or a continued focus on a single, profitable market segment.

Assessing one’s attitude to risk is imperative if you want to see how you will fare in the business world, and especially if you want to gauge your potential personal success. Charan says his most common test in gauging the potential of a business owner is to ask about the person as a leader. Are they really a risk taker?

Living with risk is not an easy idea for some. However, it is possible to learn to take on risk and still sleep well at night. Charan says dealing with risk is a thought process. I believe it is. You have to think through the risks you’re taking, prepare for the potential outcomes, and watch for the early warning signs that your beliefs and assumptions may have been wrong.

The way in which you deal with risk will dictate your progress. An unrealistic view of risk would be a foolish gamble. Keeping a firm eye on your goal, while having a true understanding of the risks involved and a solid plan to manage those risks, is key.