The Case for Making Bold Bets in Uncertain Times

Feb. 16, 2026 - MIT Sloan Management Review

---

Is fear in times of high uncertainty holding your organization back from revenue growth? New research busts three widespread myths about risk-taking and shows how to profit.

Many leaders say it’s wise to hold back from making new investments or acquisitions during tumultuous times. They posit that significant risk-taking works only if you go into an uncertain period with momentum or with a healthy fallback cushion. A new analysis of data on 6,000 companies that experienced high-uncertainty events reveals that these common beliefs don’t align with actual outcomes. Learn three myths about risk-taking and how to make bold but well-informed business bets.

Myth 1: You can take risks only from a position of strength 

Making a bold bet in times of uncertainty is easier when financial performance is strong and leaders have the support of their organizations and investors. When business performance is weaker, many leaders hold back from even seeking approval for big bets. Consistent with this, our data shows that companies with strong momentum — outperforming their peers on TSR in the three years before a high-uncertainty event — were twice as likely to take big risks as companies that had been lagging their competition.

However, our analysis also showed that when companies with weak incoming momentum made bold bets, they performed exceptionally well on average, achieving 2.3 percentage points higher annual TSRs than companies that remained cautious. This illustrates that periods of high uncertainty can present a turnaround opportunity. After all, these uncertain moments can act as great equalizers, disrupting established industry structures and business models and creating an opening for struggling businesses to catch up or even leapfrog their competition.

Myth 2: You need a proven track record of risk-taking to pull it off.

A belief related to Myth 1 is that bold bets are best left to risk-takers who know how to deal with uncertainty. Companies without such experience, in contrast, often view turbulent times as the wrong moment to start taking bold risks.

Indeed, among businesses in our sample that were affected by more than one high-uncertainty event, those without prior risk-taking experience were less than half as likely as their experienced peers to double down on M&A activity. But our observations challenge such hesitation: First-time risk-takers delivered annual shareholder returns 6.3 percentage points higher over the three years following the high-uncertainty event than did peers that remained cautious.

Moreover, our analysis shows that experience in risk-taking can breed overconfidence and backfire. Among companies with a history of risk-taking, 33% fell into negative TSR after making another bold bet — a rate almost 10 percentage points higher than that of first-timers. Boldness should be encouraged when caution has previously prevailed, but leaders still need to guard against excess and overconfidence.

Myth 3: You can take risks only if you have a cushion to fall back on.

Bold bets are often perceived to be the domain of those with a built-in cushion, such as diversified companies, which can fall back on the resilience created by their broader product portfolios. Meanwhile, concentrated companies are often held back by the worry that a bold misstep could endanger their whole enterprise. Indeed, in our sample, diversified companies took bold risks 47% more often in times of high uncertainty than their more focused peers (which we defined as businesses whose largest segment makes up at least 70% of total operating income).

However, once again, the results do not bear out this belief: Focused companies that more than doubled M&A spending during high-uncertainty events achieved 10.2 percentage points higher annual TSRs in the following three years than focused peers that remained cautious.

Our analysis also shows that focused companies that made bold moves did not face a higher failure rate than their diversified peers. Both had an 11% likelihood of delivering negative shareholder returns in the three years following the uncertainty period. This may be because bold bets by a diversified company can trigger ripple effects across the company’s portfolio; for example, an underperforming acquisition in one division may undermine investor confidence in the entire group. More-focused companies, on the other hand, can more easily rally conviction around a single big move and focus resources on its successful execution.

In times of elevated uncertainty, taking risks may be a key to creating sustained advantage. As Warren Buffett has demonstrated, those willing to act decisively when others retreat often find outsize success.

About the Authors

Adam Job, Ph.D., is a senior director at the BCG Henderson Institute. Ulrich Pidun, Ph.D., is an insights leader at the BCG Henderson Institute and a partner and director at Boston Consulting Group. Valentín Szekasy is an ambassador to the BCG Henderson Institute.

Read the full article here.