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Are You a Risk-Taker or Just Reckless? Calculated decision-making is essential for entrepreneurs while recklessness puts you and your company at risk. Here are four traits to watch for to prevent dangerous decision-making and its damage.

By Gwen Moran Edited by Frances Dodds

Opinions expressed by Entrepreneur contributors are their own.

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By nature, business owners are typically risk-takers, choosing to create their own enterprises instead of working for someone else. However, leadership expert Steven Mundahl, co-author of The Alchemy of Authentic Leadership (Balboa Press, 2013) says that the line between necessary calculated risk-taking and reckless behavior is sometimes difficult to determine.

By monitoring certain traits, he says leaders can become more self-aware and help avoid destructive decision-making tendencies that can hurt their companies, employees and livelihoods.

Here are four traits that risk-takers should keep an eye on.

1. Sensation-seeking.
People prone to extreme risk-taking in their professional lives typically crave sensation in their everyday lives. They may seek out physical activities that are or seem risky, like skydiving or bungee jumping, Mundahl says.

They may seek out that same "rush" in business settings, thriving when the atmosphere is chaotic or when they're engaged in high-stakes decision-making. In those cases, it's important to move beyond the adrenaline rush of the moment and consider all aspects of a decision before finalizing it, he says.

2. Concern about consequences.
Recklessness may be an issue for people who don't have a great deal of concern for consequences. Those who shrug off the potential cost or fallout from a failed decision or action may be more prone to make dangerous decisions than those who review all of the possible outcomes and think carefully about what will happen if the worst-case scenario comes to pass.

That's not to say you should be paralyzed by fear, but you should understand what could happen if the outcome of your action or decision is not as you'd hoped and have an idea of what you'll do in that situation.

Related: Train Your Brain to Overcome Fear

3. Impulsiveness.
People who have issues with willpower and who tend to make decisions quickly without doing the necessary research or investigation are typically more prone to making reckless decisions than those who are more disciplined. "They're the type of people who will follow a plan for a while, but then will throw it all away with a decision that looks good at the time instead of keeping the big picture in mind," Mundahl says.

4. Denial.
Reckless decision-makers have higher levels of denial. They prefer not to face the reality of their choices. Instead, they ignore fallout or make excuses for why a particular decision didn't work out. They also make light of the potential for failure or choose to disregard it entirely. People who have trouble facing a situation's facts are more likely to make decisions that are not grounded the best interest of the company.

Of course, these traits are not always indicators that an individual has reckless tendencies, says Mundhal. However, being self-aware and understanding your own personality can give you an understanding of areas that could be problematic when it comes to making decisions in your business and personal lives. Understanding your traits can help you offset them and lead to more effectiveness in every area of your life.

Related: How to Become Risk Savvy

Gwen Moran

Writer and Author, Specializing in Business and Finance

GWEN MORAN is a freelance writer and co-author of The Complete Idiot's Guide to Business Plans (Alpha, 2010).

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