We have all probably heard the phrase “transaction risk” a million times and probably more than I can count. We use the word “risk” to mean risk in the sense of a chance occurrence, not the risk of doing something wrong with a financial investment. My father used to say that we all have two kinds of risk – those that are guaranteed to happen and those that are not.
That is a common definition of risk, but it can also be taken to mean “any chance occurrence.” I’m not saying you shouldn’t have a slight chance of something bad happening, but just that you should be aware of that potential risk. If you have a significant chance of something bad happening, then you need to do something about it, but it should only be a minor chance to begin with.
But this is where the risk/reward equation doesn’t really work. Risk doesn’t exist in isolation. You can’t just stop worrying about a single possibility because it isn’t real. You can’t stop worrying about something simply because it’s a risk. Yes, you still can go for a walk or look at the weather, but you also need to think about those things even though they’re not the real reason you’re doing it.
Transaction risk means there is a chance that something could happen that will hurt you and others. If you have a business, a job, a relationship, or a hobby that has large transaction risk, then you need to take precautions. You need to be able to handle that risk and still reap the rewards.
Transaction risk refers to a risk of losing money that could cost you something valuable. For example, if you are about to start a new venture, you are likely going to have to give someone money. You might also have to make a trade with another party, such as buying something they would like to have. In either case, you need to be able to handle transaction risk and still reap the benefits.
We know that the value of your time is often tied to the value of the goods or services you are going to provide. The more valuable the goods or service you will provide, the more you have to pay to get them. In addition, because of the way the web works, the more you offer, the more likely you are to get lots of traffic. Also, this traffic will increase the value of the goods or services you are going to provide.
Transaction risk is the risk of being unable to deliver the goods or services you want to provide or having the goods or services you provide become unavailable. If you are a successful entrepreneur, you can deal with this risk by either increasing your product or service offerings or by improving your delivery methods (like delivering on time and within budget). In any of these situations you’ll get traffic and a higher rate of return.
I’ve always been taught that I should be very, very cautious about my customers’ transactions, because I want to make sure they are happy. It’s also important to know that your customers will not always be happy once you’ve provided them with the goods or services they want. So, again, I like to think of transaction risk as both a positive and a negative thing.
Transaction risk is both a good and a bad thing. The good is that it allows you to be more creative in creating a relationship with a customer or prospective customer. For instance, you could make a deal with a customer where you pay them a certain amount of money upfront, then they get a certain amount of money through a certain type of transaction (like buying you a drink or a dinner) that they pay off over time.
The bad is that the transaction risk is not only in the customer, it’s also in you. Just because you agreed to a transaction doesn’t mean you really agree to it. A customer could get upset and demand a lot of money or go on a rampage. You don’t want to be the kind of customer who wants to rip your throat out and then go on a rampage.