By George S. Chua Most people understand the concept of risk, which is to put something at stake in order to achieve an objective or attain something desirable.  We do this every day without giving it much thought. We ride in our car or take public transport to get to work daily, we all know that we face the risk of getting into an accident or getting robbed and yet we do this routine willingly.  We take this risk because we know that the chances of getting into an accident or being robbed is within acceptable limits and that the consequences of not taking this risk is much worse. Of course, we try to reduce our risk by taking precautions.  If we know we are taking public transport we minimize our risk of being robbed by not carrying too much cash and not wearing flashy jewelry.  We also increase our chances of surviving a bad collision by wearing our seatbelt and riding in a larger vehicle with modern safety features.  In addition, we can also have ourselves and our vehicles insured. Traditionally, risk capital means funds invested in speculative activity.  However, I would like to think of it as anything that would increase your capacity to take on risk.  Would putting in a million pesos in a new business be something that you can take the risk on?  It depends, obviously if you only had a million pesos, perhaps that would be too much risk for you to take.  However, if you had a hundred million pesos on hand, putting in a million pesos on a new business venture is certainly something you can afford. Building up risk capital goes well beyond increasing your capacity to take on financial risk by amassing wealth.  It includes improving your physical, mental and psychological capabilities.  Would you risk running a full marathon if you were not physically in shape to do so?  The risk of injury or even death would be very high if you are not physically prepared to run a marathon.  Likewise, would you be ready to handle married life with a wife and kids if you were mentally and psychologically unprepared for family life? Building up risk capital is an ongoing process that prepares you to take on a multitude of different types of risk.  Saving money and building up financial capital is only one aspect.  You also need to invest in yourself by being physically in shape and mentally prepared by getting the right education, degrees and certifications.  Building up goodwill, expanding your network and maintaining a positive reputation is also part of building up your risk capital. Having more risk capital enables you to take on larger challenges without compromising your ability to make rational decisions.  Having more risk capital actually prepares you to take on more risk and improves your chances of success.  Hopefully, it also prevents you from taking unnecessary risks that does not provide you with a commensurate rate of return. (Comments may be sent to [email protected])