The Mercedes team principal explained his squad's call to leave Lewis Hamilton out on medium tyres in the lead while Red Bull pitted Max Verstappen for softs under a late safety car in the Zandvoort race.
Under the same safety car, Mercedes pitted George Russell for softs, putting him behind Verstappen on track in third place, to split its strategy for the sprint to the finish.
The call backfired for Hamilton, who dropped from first to fourth, as Verstappen charged to victory ahead of Russell and Ferrari's Charles Leclerc.
The outcome left Hamilton furious over team radio at the Mercedes strategy call, and immediately after the race, Wolff spoke to his driver to say he would explain the decision not to pit him for softs.
Wolff sympathised with Hamilton but confirmed rather than a strategy error, Mercedes wanted to go for a risky strategy to give it a chance to fight for the victory rather than settle for a conservative result.
"It is highly emotional for the driver, you are that close to be racing for the win and then you've been eaten up, so it is clear that every emotion comes out," Wolff said on Sky Sports F1.
"You, as the driver in the cockpit, you are alone and you don't see what is happening. We discussed at the moment, are we taking risks for the race win? Yes, we are taking risks.
"He had a tyre that was five laps old, the medium, holding position was the right thing to do. At the end it didn't work out for him but I'd rather take the risk to win the race with Lewis rather than finish second and third.
"Lewis was ahead, so you always have a little bit longer with the call [for those behind]. You can do two things; you can either pit Lewis and lose track position against Verstappen and leave George out screwed, or you can pit both, screwed. So it was worth taking the risk.
"If you do that [leave both out] you have both on an old tyre, but this would have guaranteed second and third and we wouldn't have raced for the win with Lewis."
Wolff also didn't think pitting both drivers for fresh softs would've worked as it meant both Hamilton and Russell would have been behind Verstappen at the restart and on the same tyres unable to attack the Red Bull driver.
"I think the Red Bull has so much straightline speed that all on the same tyre out there is no way we are winning," he added.
"I think we can look at the positives and this is what I just discussed with Lewis, there is so much more positive to take.
"Of course second and fourth is annoying but we felt we had a good race car here. That's what is most important and you've got to take risks where we are."
