Damage Control

Improving your management of risk doesn't have to be expensive. You don't need costly technology, time-intensive training or disruptive reorganization, says Bryan. The main requirement is a change in your mindset which forces you to think about opportunities in terms of breaking down big risks and applying familiarity advantages whenever possible. This can be done almost unconsciously, and many good risk managers do just that. "The best are instinctual," Bryan says. "They haven't thought about what they're doing. Good business managers just [naturally break down risks and use familiarity advantages]."

Clearly, it can be costly to hire top talent to provide you with any familiarity advantages you lack. However, just as clearly, this is well worth it, Musk says. And entrepreneurs are often uniquely well-positioned to give talented and ambitious people what they most want from their jobs: a chance for ownership, in the form of stocks or share options, in a fast-growing enterprise.

"Entrepreneurs shouldn't try to hold on to too much of the company," says Musk. "It's better to give away a piece of it to get somebody stronger and maximize the overall value of the pie than to try to hold on to too much."

This article was originally published in the November 1999 print edition of Entrepreneur with the headline: Damage Control.