Kiwis Need To Talk About Our Fear Of Risk And What It’s Costing Us

New Zealand has a deeply ingrained aversion to risk—evident, for example, in the overwhelming majority of KiwiSaver accounts, which lean conservatively—which may be a significant factor limiting our economic growth, innovation, and competitiveness on the international stage.

Meurig Chapman, CEO of Happy Prime, a leading specialist in credit risk within the corporate banking and financial services sectors, says that risk is an inherent part of life, but we don’t like it.

"Everything we do involves risk, from crossing the road to making investment decisions. The challenge is not avoiding risk entirely, but understanding how much we are willing to take for the rewards we seek."

This applies to individuals, businesses, and even national economic policy.

Chapman says Kiwis need to strike a more careful balance between risk and reward and the limitations that Government controls place on them.

“Regulation and compliance are necessary to ensure stability, but excessive constraints can stifle productivity and innovation—we are one of the most regulated economies in the world.

“Filling out forms, meeting compliance requirements, and navigating bureaucratic hurdles impose costs, making businesses less agile and competitive,” he says.

Safety is not necessarily a recipe for success

New Zealand’s conservative approach to capital investment has prioritised safety at the expense of economic dynamism.

“Other countries demonstrate a more balanced approach. In the United States, risk-taking has led to significant successes in the tech sector, even though it has also resulted in high-profile failures. Bearing in mind that companies like Amazon, Microsoft and eBay emerged from the dot-com crash,” Chapman says.

Similarly, Australia has fostered a culture of investment in innovation, recognising that not all ventures will succeed but that some will drive substantial economic gains.

In contrast, New Zealand relies heavily on traditional industries such as dairy farming and property investment rather than channelling capital into high-growth sectors like technology and advanced manufacturing.

Chapman says Kiwi’s caution can be traced back to several factors, notably the 1987 stock market crash, which had a lasting impact on confidence.

“The housing market’s historical capital returns has also contributed to the perception that property investment is a low-risk, high-reward strategy, even though this is not always true. Additionally, a lack of attractive investment alternatives within New Zealand has driven many investors to look offshore for better returns,” he says.

Time to reassess our risk appetite 

New Zealand must reassess its risk appetite to stimulate economic growth and improve national prosperity. This means encouraging investment in businesses that drive productivity, adopting a more strategic approach to financial risk, and reducing unnecessary regulatory barriers.

A shift in mindset—away from risk aversion and towards calculated, well-managed risk-taking—could help unlock new opportunities and strengthen the country’s economic future.

Key takeaways:

Balancing risk and reward – Risk-taking is essential for growth but must be managed effectively to avoid excessive losses.

Reducing regulatory constraints – While compliance is necessary, excessive bureaucracy can limit business productivity and innovation.

Encouraging investment in innovation – Diversifying beyond traditional sectors like housing and agriculture could help drive economic progress.

“Risk aversion may feel safe, but it leads to stagnation. Without calculated risk-taking, growth and innovation suffer, limiting long-term prosperity. New Zealand must embrace risk to remain competitive and create future opportunities,” Chapman says.

ABOUT 

Established more than seven years ago, Happy Prime is a risk consultancy firm based in Auckland that helps firms decrease or eliminate risk in areas such as a business's operational, financial, and technology functions. Most of Happy Prime's work is with banks, finance companies, and utility providers.

Happy Prime helps clients navigate regulatory challenges and economic fluctuations, offering unique, expert solutions to manage credit risk and compliance. It focuses particularly on sophisticated risk strategies to de-risk businesses from potential market volatility and regulatory oversights.

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