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How to play the risk card

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Negotiation touches every part of our lives. Relationships in business and in our personal lives are negotiated. And the skills to do it effectively can often mean the difference between getting what you want or losing out. You don’t get what you deserve, you get what you negotiate!

In the first section of the book, How to be a Great Negotiator, written by property economist, investor and developer Neville Berkowitz, the characteristic traits of a great negotiator are explored in short, bite-sized nuggets of advice.

Over the next few months, we will bring you the traits needed to succeed at the art of negotiating.

(Courtesy of PersonalEmpowerment.co)

102 Risk taking

You only negotiate with someone who has something you want or who wants something you have. The one who wants or needs the most is in the weaker position in a negotiation. The stakes or risks are often relatively equal between buyer and seller. But both parties tend to play their cards close to their chests, trying not to appear too eager and hoping to get the best deal they can.

But if a satisfactory outcome seems unlikely, you can always play the “risk card.” The standard risk strategy is an ultimatum in which you make your best offer, stating that if it isn’t accepted you’re willing to walk away with nothing. Or it means you take your best shot in the situation, knowing it’s all or nothing. These are calculated risks in which the worst-case outcome is still acceptable. Calculated risk-taking is not uncommon in business and negotiations, and in daily life. We do it every time we make a lane change in busy traffic, cross a street in the middle of a block, or ask someone out on a date. Impulsive risk-taking is far less common and tends to be a reflection of an immature or unbalanced personality. Impulsive risk-taking involves blind spots and short-term thinking, with a greater margin of error, more mistakes and losses, and often more severe consequences. The classic example of impulsive risk-taking is the gambler who bets all his savings on black on one spin of the roulette wheel. No calculated risk-assessment would ever sanction such a bet.

To play the risk card effectively in a negotiation, you need to project supreme confidence, resoluteness, or indifference in your voice, body language, and eye contact. It’s best not to make ultimatums if you’re not willing to walk away. If the other party calls your bluff and you back down, you end up in the weaker position, having lost some face. Walking away on your terms is a show of strength that can pay off. Never be afraid to say, “No, that’s not acceptable,” and walk away. The other party often will reconsider, and may come back to you with better terms or on your terms. Then the power shifts to you.

If a party uses the risk tactic with you, you need to decide how important the issue being negotiated is and whether the terms they are now demanding are acceptable, or at least tolerable to you.

It’s also important to distinguish between calculated risk-taking and impulsive risk-taking. A great negotiator knows the difference between the two. Great negotiators are great risk-assessors and thoughtful risk-takers. A calculated risk is a measured act based on having assessed the circumstances, the odds, and the potential risk or loss, and stems from a determination that the risk is worth taking.

The impulsive risk-taker is a gambler who risks based on an incomplete assessment of circumstances, odds, and potential loss. His or her decisions are based on an unreliable gut feeling or hunch, and may even be driven by the pure thrill of the risk itself. Because all negotiators are fallible, have blind spots, and can’t predict the future, calculated risks are sometimes necessary to advance or close a negotiation. A great negotiator always assesses the risk involved in any decision. With a calculated risk, if you lose this pitch to your client, lose a prospective client, or lose some money on a deal, no great loss has occurred and another opportunity will emerge soon enough. But if the stakes include diminished quality of life for you, your company, your family, or those whose interests you are entrusted to serve, protect, and improve, it is not a risk worth taking. Business and negotiations are no place for gambling.


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