High Stakes and High Rewards: Lessons in Risk Management from Horse Racing for Modern Enterprises

Horse racing, from an exterior point of view, looks unstrategic and largely unbusinesslike in many ways. The premise is simple enough: run fast. But beneath the surface and behind the scenes, there is a wealth of commonalities between business ventures and horse management.

As you peruse 2025 Breeders' Cup Classic odds, for example, you'll be reviewing not just the likelihood of individual animals finding success at the highest level, but also the accumulation of effort from a wide range of professionals. In this article, we take a look at how horse racing is a good metaphor for business.

Managing Risk

Obviously, the need to manage risk in business is very apparent for most entrepreneurs. On the one hand, injecting capital into a new enterprise is a prerequisite for most growth strategies. On the other hand, it's also a potential way for businesses to lose money. Losing money means more than just red on a balance sheet. It potentially means people losing their jobs, investors losing their retirement funds, and so on. And so every business risk-related proposition needs to have a clear level of probability attached, along with an expected result.

Horse management teams think similarly. They don't necessarily put all of their thinking in strictly business terms, but the level of financial risk for a champion-grade thoroughbred is actually quite comparable. 

Horses that reach the stage where they are fit for competing in the Breeders' Cup or the Kentucky Derby, or other high-profile events, will often be the product of millions of dollars in investment. The team is not necessarily counting only on the horse to win races, though that certainly helps. They're also expecting a return on stud fees and other similar monetization opportunities.

But the point is, there is a very clear risk and reward proposition that is taking place behind the scenes. We as fans don't always see all of these components, but it is baked into every horse racing and management choice.

Calculated Risk

And this kind of brings us to the analogy. Horse management teams are absolutely taking calculated risks, and surely is the investor who's gone in, considered the sport of horse racing, and then backed off from the idea by all of the associated costs. This is a valid response, but not the only response. The alternative? Relentless preparation.

In business, risk is mitigated by your readiness to assume it. The idea - the mantra, if you will - of many high-achieving business people is to prepare so thoroughly that failure would be almost ridiculous. Unfortunately, we do live in a world where almost ridiculous things happen, but you can limit your odds of a bad result by taking a page out of the book of horse management teams.

Data-Driven Decision Making

Like businesses both big and small, horse management teams use hard numbers to inform their decision-making and determine eligible animals for competition at the highest level. Data points have always been a key element of the sport, and that's never been truer than now in an age of big data and automation.

In business, of course, the data points you look at will be specific to your objective, but you most likely have even more areas of information to take into consideration than a finely tuned horse management team. 

Every department now produces an incredible amount of information with nearly every action it takes. From marketing and sales to human resources and customer experience, there is a wealth of data to utilize. Understanding these numbers is the same thing as understanding your risk, and more importantly, taking it out of the equation as much as humanly possible.

Choosing Your Team

It is also worth keeping in mind that horse management is very personnel-driven. Different people take on different functions, and a strong racehorse will generally have an equally strong team behind them. Yes, the animal does all of the heavy lifting, but there is a reason that certain trainers, jockeys, and even owners experience better results than the general public.

Business owners are similarly rewarded for understanding when and how to delegate. You don’t need to know how to do everything—you just need to find the right people for the right job.

Grit, determination, and finishing strong.

These are the characteristics of a championship-grade thoroughbred. They’re also the qualities that any truly successful entrepreneur will have.

Business owners usually come to a point where they realize: Okay. Preparation, data, good decision-making—it’s gotten me 80% of what I want. That final 20%? It’s often a matter of willpower, being open to discomfort and uncertainty, even anxiety—opening the door to failure so that you can climb the ladder of success.

Here’s the thing: at the end of the day, the journey itself is inconsequential unless you finish strong. Go out there and get your win.