The phrase “no risk, no reward” couldn’t be more spot-on for businesses and professionals trying to stand out in today’s crowded markets.

Harvard Business School Professor Robert Simons put it best: “Competing successfully in any industry involves some level of risk.” And he’s right—companies that take bold risks often see big payoffs. Just look at Netflix. They didn’t just disrupt the video rental industry; they bet big on streaming when it was still uncharted territory. That gamble paid off, with their stock soaring an incredible 6,230% in just a decade.

According to PwC’s Global Risk Survey, businesses that embrace strategic risk management are twice as likely to see faster revenue growth. But how do you figure out what’s a smart risk versus a reckless one? At Jotform, taking calculated risks—like launching new products or broadening our mission—has been a cornerstone of our success over the past 18 years. Here’s our simple three-step approach to evaluating and taking smart risks at work.

Shift away from managing outcomes

In order to become an expert at taking calculated risks, you have to understand certain truths about decision-making.

First, humans tend to be risk averse because, as a growing body of research demonstrates, losses loom larger than potential gains. Even when the potential to gain $50 outweighs a $40 loss, the fear of losing still outweighs the pleasure of winning.

To overcome our tendency to give disproportionate weight to losses, we can assess risks in batches, the same way we might consider individual financial investments as part of a larger portfolio—understanding that some losses are simply part of overall gains. Then, with each decision, focus your energy more on doing your due diligence—researching and analyzing trends, reading case studies, and conducting economic forecasting—and less on trying to anticipate the outcome.

As Harvard Business Review notes, risk is unavoidable. Companies should switch from processes based on managing outcomes to processes encouraging calculating probabilities. As long as you do your research ahead of time, you can feel confident in your decision, even if it doesn’t pan out as hoped. After all, cultivating an atmosphere where failure is accepted (or embraced) is key to innovation and growth.

Develop a contingency plan

While accepting that failure is possible, you can still plan for worst-case scenarios—in other words, develop a contingency plan. Developing a contingency plan helps transform a risk from reckless to measured.

“Good contingency plans prioritize the risks an organization faces, delegate responsibility to members of the response teams, and increase the likelihood that the company will make a full recovery after a negative event,” says Mesh Flinders, Author at IBM Think. Give yourself peace of mind that even if all goes south, all will not be lost. You have a plan of action.

Before following through with a given risk, think about the potential threat to your business. You want a clear picture of when the contingency plan should spring into action. Then, brainstorm the response you envision—for yourself or colleagues—with clear instructions and protocols. Make sure it’s crystal clear who’s responsible for which actions.

Laying out these steps in advance can both minimize uncertainty and empower you and your team to respond quickly and calmly in the face of unexpected challenges.

Log your risks like business expenses

Finally, logging your business risks makes them feel more calculated and less impulsive. You can methodically create an organized record of decisions and track your patterns over time.

At Jotform, we create and share templates for tracking risks the same way we do business expenses. This helps us ensure that risks are not only documented but easily accessible to the team. With this collective tracking method, we can view risks like a portfolio of investments, balancing losses against gains to get a broader perspective.

Reviewing risks this way makes it easier to identify which decisions were beneficial and which need to be reevaluated. In most cases, we find that losses seem less catastrophic when weighed against cumulative gains. What’s more, knowing that failures are rarely disastrous, our team members feel more confident experimenting and innovating.

But if patterns of losses do emerge—where failures clearly outweigh successes—this logging process gives us the data we need to spot recurring issues, analyze our decision-making habits, and refine our strategies.

In today’s world, reluctance to accept risks doesn’t just stifle innovation—it can have devastating consequences for a company’s long-term success. But taking risks doesn’t require risking it all. Hopefully, the above strategies can help you roll the dice with confidence.